LightSquared’s grasp on solvency appears to be slipping as the latest round of published reports indicated that the firm was on the verge of filing for bankruptcy protection.
According to The Wall Street Journal, LightSquared and its financial backers have until end of business today to hammer out a new deal to save the company from bankruptcy.
LightSquared has had to batten down the hatches in recent months as its plans to launch a nationwide, wholesale LTE network were dashed by its inability to get its hands on spectrum assets that currently interfere with some ground-based GPS systems. The company recently swung a deal with spectrum holder Inmarsat to amend an agreement that will provide LightSquared with more time in which to attempt to secure access to spectrum needed to move forward with its mobile broadband plans. This followed reports that the company cut 45% of its workforce earlier this year in an attempt to save money.
One sticking point for LightSquared appears to be the continued stewardship by Philip Falcone, who’s Harbinger Capital Partners has been funding LightSquared’s operations. Investors seem to want Falcone to step aside as talk continues that his leadership has hindered the company’s ability to attain its spectrum. Reports surfaced late last month that Falcone had agreed to eventually step aside at LightSquared.
Bottom Line: LightSquared’s slow spin around the drain continues as investors seem fed up with current management’s inability to gain access to valuable spectrum assets, or at least some form of compensation. However, it must be reminded that rumors of LightSquared’s demise have so far remained just that: rumors.
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