Harbinger Capital has filed an amended reorganization plan for LightSquared Inc. detailing, among other things, the plan’s proposed $460 million in new DIP financing and the proposed $360 million of exit financing that is slated to ultimately replace the new DIP.
The amended plan also disclosed financing commitments for both facilities from Harbinger and JPMorgan Chase.
In its Sept. 11 filing, Harbinger also filed a plan support agreement with the Manhattan bankruptcy court indicating that MAST Capital, the holder of LightSquared Inc.’s prepetition secured debt, had formally signed onto the Harbinger plan.
As reported, the Harbinger plan would reorganize LightSquared Inc. separately from its unit, LightSquared LP. The limited partnership unit has roughly $2 billion of first-lien secured debt, including accrued but unpaid interest outstanding, and is the operating unit that LightSquared was using to build its wireless network. This is also the LightSquared LP debt that was acquired by Charles Ergen, founder and CEO of LightSquared competitor DISH Networks that has resulted in a significant amount of litigation and dissension in the case (see “LightSquared aims for Oct. 20 confirmation hearing amid deep divides,” LCD, Aug. 12, 2014).
The Harbinger plan for LightSquared Inc., which in addition to LightSquared LP controls several other communications companies, most notably Reston, Va.-based One Dot Six, calls for Harbinger and JPMorgan to fund by Oct. 31 a replacement DIP for the company via a $160 million senior DIP and a $300 million junior DIP. The proceeds of the new DIP would be used to repay the company’s existing DIP facility, which would be allowed in the amount of $109.28 million, and about $131.128 million of the company’s prepetition secured credit agreement debt, which would be allowed in a total amount of $331.128 million.
The remaining $200 million of the prepetition secured claim – which as noted above is held by MAST Capital – would be purchased on a dollar-for-dollar basis by JPMorgan and converted into a like-sized portion of the junior DIP, with the end result being that MAST’s claim would be paid in full, in cash.
The remaining funding for the junior DIP would consist of $100 million of new money to be provided by Harbinger. Interest under the junior DIP would be at L+200 with a 1% LIBOR floor.
Upon emergence from Chapter 11, the senior DIP facility would convert into a $160 million, four-year term facility with One Dot Six as the borrower, again at L+1,100 with a 1% LIBOR floor, according to the filing.
As for the junior DIP, the $200 million portion provided by JPMorgan via the purchase/conversion of the prepetition debt would be replaced by a new $200 million exit facility at reorganized LightSquared Inc., the terms of which were not provided in the filing.
In exchange for its portion of the junior DIP claim, meanwhile, Harbinger would receive, among other things, new One Dot Six preferred shares having an original stated principal value of $175 million and 70% of the reorganized One Dot Six common shares.
JPMorgan would also receive, in exchange for the prepetition preferred shares of LightSquared Inc., held by its affiliate, SIG Holdings, 100% of the equity in reorganized LightSquared Inc. Among other things, the reorganized LightSquared Inc., would hold, once all of the reorganization transactions were complete, One Dot Six preferred shares having an original stated principal value of $160 million and 30% of the reorganized One Dot Six common shares.
Last, but not least, the final piece of the reorganized capital structure would be a $40 million, five-year second-lien exit facility to issued by reorganized LightSquared Inc. to reorganized One Dot Six, priced at L+200, with a 1% LIBOR floor.
It should be noted that the Harbinger plan is contingent on, among other things, the LightSquared LP lenders being paid in full under the previously reported reorganization plan filed by LightSquared, or, alternatively, a judicial ruling that they do not hold a claim against LightSquared Inc., arising out of the parent company’s guarantee of the limited partnership’s credit agreement. That determination will depend, in part, on the results of what will likely be a contested valuation of the LP company, since a significant portion of the LightSquared LP lender recovery is in the form of equity.
As reported, the company’s confirmation hearing is scheduled for Oct. 31, with a confirmation date of Oct. 31 contemplated under the current schedule. – Alan Zimmerman