LightSquared Auction May Foil $2 Billion Offer, Lenders Say

LightSquared’s proposed format for an auction of its wireless-spectrum assets is improper and may foil a $2.22 billion offer from a unit of Charlie Ergen’s Dish Network, a group of lenders said.

The bankrupt company run by Philip Falcone faces a fight over how to sell its assets after the lenders filed an objection in Manhattan bankruptcy court. LightSquared proposes letting a committee that includes Falcone’s investment firm Harbinger Capital Partners choose the winning bid, something lenders say shouldn’t be allowed because Harbinger opposes any sale of LightSquared’s assets. LightSquared’s auction proposal would let the company reject any offer which doesn’t have approval from the Federal Communications Commission. That would let the company block potentially attractive offers that most creditors support, the lenders say. Lenders have said Dish’s offer, valued at as much as $3.5 billion including assumption of contracts, should be the auction’s leading bid. The company has urged the FCC to approve its proposal to license its spectrum before the auction so that bidders can properly value the assets. “Maintaining a perpetual state of uncertainty makes LightSquared a ‘spectrum grab bag:’ no one will pay very much for the chance to come up empty,” a LightSquared representative wrote in a letter to the FCC dated Sept. 16.