Remember Phil Falcone? Hedge fund manager about yea high? Cuts his hair like he’s still playing professional hockey? Is betting the farm on a company called LightSquared that “seeks to create connectivity for all” but in doing so might “cost 794 lives in aviation accidents over 10 years with disruptions to satellite-aided navigation” and filed for Chapter 11 bankruptcy last May? Anyway, LightSquared’s creditors were in court today asking for the right to go after Big Phil/Harbinger, who they believe screwed them big time. Read more »
LightSquared
LightSquared Creditors Seek Permission To Go After Mrs. Phil Falcone’s Shoe Collection
By Bess LevinHarbinger Capital-Backed LightSquared: What If We Told You We Could Build A Wireless Network That Doesn’t Kill People Via GPS Interference? Does That Sound Like Something You’d Be Interested In?
By Bess Levin
As many of you know, the last year or so has been a pretty tough one for Phil Falcone. In addition to a civil suit against him by Harbinger Capital investors, DWAI’s on the home front, and the pesky matter of being charged with securities fraud by the SEC, which would like to see him banned from the industry, what’s really been plaguing him has been the opposition encountered by LightSquared, his dream and the thing he’s more or less staked all his and his investors’ money on. Before it entered Chapter 11 bankruptcy in May, the most serious charge against the company was that while it may seek to create “convenient connectivity for all,” in doing so, the odds are high it would cause GPS interference that would result in boats getting lost at sea; “degrade precision services that track hurricanes, guide farmers, and help build flood defenses“; and, according to the FAA, “cost 794 lives in aviation accidents over 10 years with disruptions to satellite-aided navigation.” Now, four months later, the would-be wireless network has come back with a plan: LightSquared, but without all the murderous bits (for now). Read more »
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 »
Phil Falcone Feels Like He Needs To Take A Restraining Order Out On LightSquared Lenders
By Bess Levin
LightSquared’s lenders on Tuesday will take their fight to probe the troubled wireless venture’s main backer, Philip Falcone’s Harbinger Capital Partners, to a bankruptcy judge. The lenders, which are owed more than $1 billion, are eyeing loans LightSquared took out last summer from Harbinger, which owns most of LightSquared’s stock and has four of the company’s six board seats. The lenders say the loans appear to be “insider” deals that deserve scrutiny and might even be eligible to be unwound through litigation, a move that could boost the lenders’ own standing in the line of creditors waiting for payment in LightSquared’s Chapter 11 case. Harbinger is fighting the proposed investigation, which it says the lenders are pushing in a bid to “embarrass” and “harass” the hedge fund. It said the alleged red flags the lenders see in the loans “are utter nonsense comprised of baseless and disingenuous allegations or flat out misstatements.” [WSJ]
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Hedge Funds
LightSquared Creditors Will Get The Documents They Want, After They’ve Pried Them Out Of Phil Falcone’s Cold Dead Hands
By Bess Levin
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]
Bankruptcy “is intended to give LightSquared sufficient breathing room to continue working through the regulatory process that will allow us to build our 4G wireless network,” Chief Financial Officer Marc Montagner said in a statement. [Bloomberg]
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Hedge Funds
Temporary Setbacks Aside, You Haven’t Seen The Last Of LightSquared, Phil Falcone
By Bess Levin
LightSquared Inc. filed for bankruptcy after its plan to deliver high-speed wireless to as many as 260 million people ran afoul of U.S. regulators. LightSquared, based in Reston, Virginia, listed debt and assets of more than $1 billion each in a Chapter 11 filing today in U.S. Bankruptcy Court in Manhattan. The filing came after intense negotiations with creditors, who had requested that the company’s backer, Philip Falcone, step aside. Harbinger Capital Partners, Falcone’s New York-based hedge fund, had invested about $3 billion in LightSquared and owned about 74 percent of it as of Jan. 27. Falcone also had served on LightSquared’s board. Creditors asked for Falcone’s departure when they gave the company a weeklong extension on April 30 to stave off a default and keep trying to renegotiate its debt, according to a person with knowledge of the matter. [Bloomberg]
LightSquared is a wireless venture that seeks to create “convenient connectivity for all.” But those of you who’ve been keeping up know that to one man, it’s so much more. That man being, of course, hedge fund manager Phil Falcone. LightSquared is his dream. His baby. His world. His everything. And, because he has poured his heart, soul, and firm’s money into LightSquared, it is also the thing that stands to make or break Harbinger Capital. Success will mean billions for Falcone and his investors. Failure will mean Wilbur Falcone selling her eggs to a barren couple willing to pay top dollar for the DNA of a blue-eyed classically trained singer with an IQ of 150 and legs like Tina Turner.
Unfortunately, things have not been going so well for LightSquared. The yachting community worries that GPS interference caused by LS will result in boats getting lost at sea. The National Oceanic and Atmospheric Administration says LightSquared“may degrade precision services that track hurricanes, guide farmers and help build flood defenses.” The FAA put out a study that estimates LS could “cost 794 lives in aviation accidents over 10 years with disruptions to satellite-aided navigation.” The only person defending the thing (besides Phil) is Karl Rove. Meanwhile, the SEC wants to see Falcone banned from the industry, Bloomberg News has put a reporter on the “Phil Falcone Pit Stains” beat, and his investors, for the most part, despise him for petty reasons that no rational adults would ever get upset about, like borrowing $113 million from a gated fund in order to pay personal taxes and tying up much of their capital in a side project building walkie-talkies that might not pan out on account of the growing opinion that it might kill a few people.
At this time, a lesser man might decide to cut his losses and/or look within and say “Maybe my investors aren’t the problem, maybe I’m the problem.” Phil Falcone is no such man. He’s figured out a few things and what they boil down to is that his impatient, pissy investors are what is standing in the way of LightSquared soaring, which it will, when it is ready. And if those pricks won’t agree to stick around for an investment time horizon of inifinty, he’ll find people who will. Read more »
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The Only Thing That Keeps Phil Falcone Up At Night Is Counting All The Money He’s Going To Make Off Of LightSquared
By Bess Levin
From outward appearances, the past couple years have been a stressful time for Phil Falcone. After making billions of dollars for himself and for his investors on subprime, the Harbinger Capital Partners founder provoked the ire of many a client by tying up a good chunk of their money in a wireless start-up called LightSquared (a company the Federal Communications Commission is no fan of, due to the fact that it reportedly interferes with GPS devices used on land, sea, and in outer space), by borrowing $113 million from a gated fund in order to pay personal taxes, and by only allowing certain investors (Goldman Sachs) to get out while freezing redemptions for others and then telling them they could leave if they found some else to pick up their stake. Assets under management at Harbinger have dropped $23 billion, from a peak of $26 billion. For a variety of reasons, the Securities and Exchange commission wants to see him banned from the industry. A worried Bloomberg News reporter recently revealed he has a problem with pit stains (“[his] shirt appeared darker under the arms in his office last month”), which wouldn’t pose an issue were his shirt supply not dwindling rapidly (“One place Falcone is visiting less frequently is Domenico Vacca, the New York boutique where suits retail for $3,900 and shirts $490, according to a person with knowledge of his purchases. He orders every four or five months [now] compared with every two or three months between 2006 and 2009″). Read more »
But Mr. Falcone and the SEC appear divided on two crucial questions, according to people familiar with the matter. The first point yet to be agreed on is the amount of possible financial sanctions, they said. The two sides also must resolve whether as part of the settlement Mr. Falcone would face a temporary ban from working in the securities industry or acting as a director of a public company. The hedge-fund billionaire’s refusal to accept an industry ban, fearing it would essentially end his career, led to the breakdown of settlement talks last year…Harbinger and Mr. Falcone are being probed by the SEC on three fronts. About a year ago, Harbinger disclosed that it was under investigation by the SEC for possible market manipulation. It wasn’t previously reported that the allegation involves a company called MAAX Holdings Inc., now called MAAX Corp., a Canadian maker of bathroom fixtures, according to people familiar with the matter. The SEC also has been looking at whether Harbinger misled investors by failing to disclose in a timely fashion a $113 million loan to Mr. Falcone from the fund’s investors in 2009. Mr. Falcone has now repaid the loan money, which he used to help pay his personal taxes. The third issue the SEC is investigating is whether Harbinger agreed to allow some investors, including Goldman Sachs Group Inc., GS +3.71% to cash out of their holdings while barring other clients from withdrawing their money, or favored Goldman or other investors with information other clients didn’t get during a 2009 restructuring of the firm. [WSJ, earlier]
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