WASHINGTON—Highland Capital Management L.P. is contacting stockholders of Motient Corp. to criticize the wireless company’s recent deal with SkyTerra Communications Inc. and its proposal to revamp the board of directors. The move continues an escalating proxy fight by Motient’s largest stockholder in advance of the Lincolnshire, Ill.-based firm’s still-unscheduled annual meeting.
“We do not believe that the outgoing directors, given their past actions, should be trusted to act in the stockholders’ best interest in selecting a new slate to manage Motient,” stated Highland in its letter to stockholders. “It appears to us highly unlikely that the election of such a slate would put an end to Motient’s long history of mismanagement, particularly since senior management will remain the same.”
Highland, which owns about 14 percent of Motient’s common stock, has put forward its own slate of directors. Highland head James Dondero has been accused by Motient of mounting a power play to take over Motient.
Earlier this month, Motient and SkyTerra signed agreements to consolidate ownership and control of mobile satellite service assets. The firms are betting on plans to build and operate next-generation hybrid satellite-terrestrial communications networks covering the United States and Canada.
Under the proposed realignment, SkyTerra would own 70 percent of Mobile Satellite Ventures L.P., an MSS licensee that has permission by the Federal Communications Commission to combine L-band (1.5 GHz) satellite operations with land-based cellular networks in a way that could enable its subscribers to use small wireless handsets. Motient would increase to 74 percent its stake in TerreStar Networks Inc., an S-band (2 GHz) MSS licensee also planning to construct and operate a hybrid satellite-terrestrial communications system.
Motient currently has a 49-percent interest in MSV and a 61-percent stake in TerreStar.
“We believe that the proposed deal—which sells a majority of Motient’s stake in MSV to SkyTerra, and by so doing gives SkyTerra control of MSV—is structurally and financially flawed and raises serious governance concerns,” Highland wrote to Motient stockholders.
Highland claimed Motient and its stockholders will suffer a substantial tax charge from the SkyTerra deal, adding there is no evidence Motient stockholders will receive a control premium for MSV.
