bankruptcy

Philip Falcone’s LightSquared Inc. will probably be able to borrow $1 billion to finance its exit from bankruptcy as a standalone company, Credit Suisse Securities LLC said in a letter made public Friday. The Credit Suisse Group AG (CSGN) unit said it was confident it could arrange the proposed bankruptcy-exit loan as long as LightSquared, a wireless broadband provider, met conditions including obtaining the “cooperation of all parties-at-interest” in the reorganization and “all required regulatory approvals.” Philip Falcone’s LightSquared Inc. will probably be able to borrow $1 billion to finance its exit from bankruptcy as a standalone company, Credit Suisse Securities LLC said. [Bloomberg]


[via @joecheckler]

Yesterday afternoon, the SEC and the Department of Justice charged hedge fund manager, YouTube star, and prolific Tweeter Anthony Davian with fraud. Like any good alleged Ponzi schemer, Davian applied the “one pot of money” philosophy to his funds’ assets, and used investor cash to buy himself an Audi Q7 Prestige, build a palace the likes of which Akron, Ohio had never seen, and collect rare pens. As is typical in these kinds of cases, the benefit of hindsight allows those who witnessed the crime unfold in real time (clients, employees, etc) say “Well, of course it was a scam,” even if it wasn’t readily apparent at the time. Although not for a lack of trying on Davian’s part! Behold, the amazing list of red flags he dangled in people’s faces (uncovered by reporter Roddy Boyd), all but begging them to pause and say “Hey wait second, would a hedge fund manager running a legitimate and successful shop…” Read more »

  • 02 May 2013 at 12:09 PM

Lehman’s Bankruptcy Worked Out Well For Intel, Anyway

One possible reaction to Apple’s gigantic tax-optimized share repurchase program is to think that spending a lot of time fiddling with how to optimize your share repurchase program might mean you’re out of better ideas. You can ponder whether this Intel share repurchase trade described in a Lehman Brothers bankruptcy lawsuit filed yesterday supplies any evidence on that question. Intel decided to buy back $1bn of its stock in August and September of 2008, and rather than just buy it in the market it entered into a pretty fiddly forward contract with Lehman like so:1

  • Intel gives Lehman $1bn on August 29.
  • Lehman hands the $1bn back to Intel for safekeeping – it’s Lehman’s money, but Intel keeps it as collateral.
  • On September 29, Lehman gives Intel some shares, based on the average price of Intel stock from August 29 to September 26.2
  • The dollar amount of shares Intel buys is $1bn, if the average price is $21 or below, or $250mm, if the average price is $25 or above, or some amount linearly in between if the average price is between $21 and $25:

  • If the dollar amount Intel buys is less than $1 billion, Lehman gives back the extra money.
  • So in other words as the stock price goes up Intel buys fewer shares, and vice versa, which is kind of wrong-way for them3 but right-way for Lehman.
  • In exchange for that risk Lehman agrees to give them a discount of 10.6 cents per share.4
  • The number of shares Intel buys is equal to the dollar amount divided by the average price minus 10.6 cents:

Read more »

Creditors of the former investment bank in the U.S. and Europe will get everything back. Creditors in Australia are not so lucky. Read more »

  • 30 Aug 2012 at 4:12 PM

Bonus Watch ’13: LightSquared

Harbinger Capital-backed LightSquared is a wireless venture that seeks to create “convenient connectivity for all.” Unfortunately, as the Wilbur Falcone fans among us know, it’s looking like it’ll be a dark day in hell before that happens, on account of bunch of forces working together to shut this thing down at every turn, including but not limited to the yachting community that claims GSP interference caused by LS will result in boats getting lost at sea; the National Oceanic Atmospheric Administration, which has said LightSquared “may degrade precision services that track hurricanes, guide farmers and help build flood defenses”; and the FAA, which recently put out a study estimating LS could “cost 794 lives in aviation accidents over 10 years with disruptions to satellite-aided navigation.” Also not helping is the fact that LightSquared filed for bankruptcy in May, the company is blowing through cash faster than Wilbur’s Studio 54 days, and senior executives won’t stop quitting. While some people might take stock of the situation and decide, at this point, to throw in the towel, Wilbur Falcone’s benefactor is not some people. He’s making this thing work if it’s the last thing he does. So, what now? Obviously a couple of miracle workers are going to be needed and the thing about miracle workers is that they don’t come cheap. Gotta spend money to make money. Read more »

LightSquared’s lenders says Philip Falcone’s Harbinger Capital Partners won’t hand over documents they are requesting as part of an investigation over whether they can pursue claims against Harbinger and the wireless satellite company. In a Tuesday filing with U.S. Bankruptcy Court in Manhattan, lawyers for a group of LightSquared lenders owed more than $1 billion said it “appears” LightSquared received “preferential” loans last summer without any investment by Harbinger, which owns most of LightSquared’s stock and has four of the company’s six board seats. The lender group says it has the right to subpoena Harbinger as part of its June agreement to allow LightSquared to use cash secured by its loans. But Harbinger, it says, has refused. “Harbinger’s basis for its blanket refusal is that ‘as these cases progress, it will become clear that sufficient value exists to pay all creditors in full under a Chapter 11 plan,’” said the lenders, whose loans are secured by all of LightSquared’s assets. [DowJones]