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Christmas Eve scramble on for LightSquared

By
Kaja Whitehouse
Published Dec. 21, 2013, 6:38 a.m. ET

The tug-of-war over wireless start-up LightSquared continues to rage into the holidays.

A group led by private-equity shop Fortress is seeking to raise $2 billion in debt to buy the Reston, Va., start-up out of bankruptcy, sources told The Post.

Dish Network Chairman Charlie Ergen, meanwhile, pressed a bankruptcy judge this week to move on his competing $2.2 billion offer.

As The Post reported on Tuesday, Fortress has been working to cobble together a deal with JPMorgan, Mast Capital Management and other investors since private equity firm Centerbridge pulled its $5 billion bid to buy the troubled wireless network last week.

Centerbridge’s offer, including $3.3 billion in cash and the assumption of $1.7 billion in debt, seemed to push aside Ergen’s competing offer until Centerbridge unceremoniously pulled the plug last week — leaving its investing partners, including Fortress, scrambling.

Fortress, JPMorgan and Mast own stakes in LightSquared that may not be covered by Ergen’s $2.2 billion offer, thus providing them with incentive to outbid Ergen.

Fortress and JPMorgan own preferred shares, said a person with knowledge of the deal. Mast Capital, meanwhile, has a financial stake in a line of spectrum that would not be purchased by Ergen.

Billionaire investor Phil Falcone, currently LightSquared’s largest shareholder, is also aligned with Fortress.

Falcone stands to get shafted the most if Ergen wins out.

But time is quickly running out. Bids are due by Dec. 24.

Meanwhile, owners of a $1.7 billion first-lien loan, the majority of which is owned by Ergen, pressed a bankruptcy judge this week to accept the Dish founder’s bid.

To ignore the offer without a competing offer would be “alarming and reckless,” the group said.

Falcone and Ergen have been dueling over LightSquared for months. Ergen wants the spectrum to offer wireless services alongside Dish’s satellite offerings. Falcone wants to save the $3 billion he’s already funneled into the bankrupt company.