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Fortress, Harbinger back LightSquared latest bankrutpcy exit plan

Thursday, 26 Dec 2013 | 11:57 AM ET

Dec 26 (Reuters) - U.S. wireless communications company LightSquared proposed exiting bankruptcy with financing from $2.75 billion in fresh loans and an equity investment of at least $1.25 billion, according to court documents.

The plan is backed by Fortress Investment Group, Melody Capital Advisors, JPMorgan Chase & Co and Harbinger Capital Partners, according to papers filed in Manhattan's U.S. Bankruptcy Court on Tuesday. Harbinger is Philip Falcone's hedge fund and LightSquared's controlling shareholder.

The proposal replaces a previous plan based on an auction of the company's assets. LightSquared scrapped the auction after it did not receive any qualified bids to compete with a $2.2 billion bid led by Charlie Ergen, the chairman of rival Dish Network Corp.

Under the plan, Fortress, Melody and Harbinger are providing the new equity investment.

The latest proposal is conditioned on approval of LightSquared's license application by the Federal Communications Commission.

The company proposed borrowing at least $285 million from Melody Capital Advisors LLC to cover the period between court's approval of its proposed plan, which could come as soon as January, and FCC license approval, which could take many months.

LightSquared filed for bankruptcy last year after the FCC blocked its plan for a 4G LTE terrestrial wireless network because the regulator feared it would interfere with GPS navigation.

In November, LightSquared sued GPS industry leaders including Garmin International Inc for reneging on representations to LightSquared that its network would not interfere with global positioning systems devices.

U.S. Bankruptcy Court Judge Shelley Chapman ordered a hearing on LightSquared's motion to modify its reorganization plan for 10 a.m. EST Monday.

LightSquared argued it should be allowed to implement the new plan without going back to creditors to get their approval because the latest deal increases the recovery for creditors.

A hearing to confirm LightSquared's proposed plan is scheduled for Jan. 9.

The plan estimated the company's assets would be worth $8.4 billion, assuming an effective date of Sept. 30 and FCC approval for the company's license.

The case is In re: LightSquared Inc, U.S. Bankruptcy Court, Southern District of New York, No. 12-12080.

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