LightSquared filed for bankruptcy protection on Monday after failing to reach an agreement with creditors on its outstanding debt. The move has been widely expected since the would-be wireless carrier was denied regulatory approval to turn on its network, which brought an end to its $9 billion partnership with Sprint Nextel. The Chapter 11 bankruptcy filing was made in the Southern District Court of New York, after creditors holding debt belonging to chief LightSquared investor Philip Falcone was unable to receive a waiver on debt payments.
LightSquared, the massive startup that has been trying to become the fifth national provider of wireless telephone and data service, is considering filing bankruptcy after a series of setbacks have conspired to put the company's plans in real danger. According to a CNN report, Philip Falcone says that the option of bankruptcy protection has become a strong possibility in recent weeks. Falcone is the CEO of Harbinger Capital Partners, the majority owner of LightSquared.
Shares of Sprint Nextel Corp plunged Monday morning after analyst Sanford C. Bernstein downgraded the stock to an “underperform” rating over concerns the company won't sell enough iPhones to cover the enormous costs associated with its agreement with the tech giant. The company is facing a variety of challenges, including the high cost of network upgrades, a massive deb load and delays to launching 4G service due to LightSquared's failed attempt to turn its network on.
Sprint Nextel announced on Friday it is pulling out of an agreement with LightSquared to lease 4G wireless spectrum. Sprint was one of 40 companies who had agreed to piggyback on LightSquared's network, but decided to withdraw because it is looking increasingly more unlikely that the network will ever be operational. Owned by Philip Falcone's Harbinger Capital Partners hedge fund, LightSquared has been planning to launch the network and sell wireless service on a wholesale basis, providing the infrastructure and network while its partners sell the service to consumers.
LightSquared was dealt a major blow Wednesday when regulators decided to continue preventing the company from launching its wireless network, a pivotal first step in the company becoming the fifth major US wireless carrier. The National Telecommunications and Information Administration ruled that LightSquared's network would interfere with GPS signals even with the company's proposed engineering solutions. GPS is used not only in consumer navigation devices, but also by the military and aviation sector to guide airplanes and missiles.
LightSquared Inc, the wireless venture launched by billionaire Philip Falcone, reported Tuesday it has raised $265 million in a recent round of fundraising. The company will use the new capital, which came from both new and existing investors, to expand its network and other general corporate expenses.
A new, super-fast wireless Internet network is reportedly threatening to interfere with GPS signals across the U.S., potentially hindering the navigation systems of airplanes, police cars, and consumer navigation devices. The problem began when officials decided to let Virginia-based LightSquared construct a nationwide broadband network using airwaves very close to those used for GPS signals. Manufacturers of navigation equipment have warned that strong signals from the network could jam GPS signals, interfering with a wide range of navigation systems.