LightSquared Files Chapter 11 Bankruptcy; Can Sprint Save Them? - The UpStream

LightSquared Files Chapter 11 Bankruptcy; Can Sprint Save Them?

posted Sunday May 20, 2012 by Nicholas DiMeo

LightSquared Files Chapter 11 Bankruptcy; Can Sprint Save Them?

After learning that Philip Falcone, CEO of LightSquared's top investor, Harbinger Capital, may step down as public head of the company earlier in the month, we figured the tough times for the company would be over or at least kept to a minimum. Well, something rare has happened and we were wrong. I know, I'm shocked, too.

This week, LightSquared Inc. has filed for bankruptcy as it is still trying to work through the FCC rejection of its network that was supposed to supply blazing fast 4G LTE Advanced speeds to over 260 million people.

In the company's Chapter 11 filing, LightSquared listed its assets at $4.48 billion and a debt of $2.29 billion as of February 29th. This all comes after Falcone & Co. have decided to remain on-board with LightSquared.

CFO Marc Montagner said,

Bankruptcy is intended to give LightSquared sufficient breathing room to continue working through the regulatory process that will allow us to build our 4G wireless network.

To clarify, a Chapter 11 means that the company has come to a point where they need to restructure itself in order to continue its endeavors. That filing also puts on hold any and all payments to debtors, which would be the one thing, minus payroll, that could sink the company if they cannot get back to work on their network soon. It also means the company may be preparing itself for a potential sale to an interested party.

We'll just throw the name of Sprint out there, who could possibly rapidly expand its 4G LTE network and put itself right in-line with Verizon as a top competitor in 4G network speed and coverage if they were to buy LightSquared. Since the issue with the FCC comes down to the spectrum LightSquared owns, all Sprint has to do is change the frequencies on the towers and they could have the nation covered practically overnight.

At this time, of course this is all speculation, however it is a very real possibility. We do know that LightSquared has filed for bankruptcy protection, like many companies in the past five years, so it could either go really well or really bad for them at this point. We'll be the ones to bring the results to you once we hear anything about it.


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