(Updates with new financing in second paragraph.)
Feb. 15 (Bloomberg) -- LightSquared Inc., whose owner Philip Falcone fought a takeover bid from Dish Network Corp. Chairman Charles Ergen, proposed a new reorganization plan that could allow the wireless broadband company to exit bankruptcy as a stand-alone.
A disclosure statement, which explains the terms of the proposal, was filed yesterday in Manhattan bankruptcy court. Under the plan, parties including Fortress Investment Group LLC would supply $1.65 billion in debtor-in-possession financing plus $1 billion in exit financing.
LightSquared, based in Reston, Virginia, filed for bankruptcy in May 2012 after the Federal Communications Commission blocked the company’s service, saying it might interfere with global-positioning-system navigation equipment. The current plan doesn’t hinge on obtaining FCC approval, which might not come before the end of the year.
“The plan has received overwhelming consensus and support from a substantial portion of LightSquared’s significant stakeholders,” according to the disclosure statement.
Talks with creditors have been under way to reach a reorganization deal before LightSquared runs out of cash or hits an April 15 deadline on its operating loan. In December, LightSquared proposed a larger Fortress-backed plan that included a $2.5 billion exit loan and at least $1.25 billion in new equity contributions.
A confirmation hearing is proposed for March 17.
A group of lenders previously proposed selling some assets to a vehicle linked to Ergen, L-Band Acquisition LLC, which had offered $2.22 billion in cash. LightSquared’s wireless spectrum would have complemented Ergen’s satellite-television business.
LightSquared sued Ergen and SP Special Opportunities LLC, an investment vehicle linked to him, for buying the company’s debt before L-Band made its offer, claiming they sought to hijack the reorganization. L-Band has since withdrawn its bid.
The case is In re LightSquared Inc., 12-bk-12080, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
--Editors: Andrew Dunn, Michael Hytha, Sylvia Wier