Reuters: Bankruptcy News: RLPC: Lightsquared details DIP loan

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RLPC: Lightsquared details DIP loan Jun 21st 2012, 13:49 By Billy Cheung NEW YORK, June 21 | Thu Jun 21, 2012 9:49am EDT NEW YORK, June 21 (Reuters) - In court documents posted late Wednesday, LightSquared disclosed details about its $40 million debtor in possession (DIP) loan. Subject to Bankruptcy Court approval, the DIP loan will be secured by a super-priority lien on property and other assets at LightSquared Inc, the holding company for LightSquared. A hearing to approve the DIP has been scheduled for June 28 with a deadline for objections set for June 25. Assets at LightSquared Inc include five megahertz of terrestrial spectrum leases and equity interests in guarantor subsidiaries. The disbursement of DIP proceeds would be staged in the following manner: $10 million upon receiving interim court approval, $15 million as a subsequent commitment upon receiving final court approval, $5 million for capital expenditures under the One Dot Six spectrum lease drawable at a later date, and $10 million at the lenders' discretion. Besides funding spectrum buildout, cash from the DIP will be used for spectrum lease payments, professional fees, and adequate protection payments in accordance with the LightSquared Inc budget. The DIP facility is priced at 11 percent payable in kind (PIK). Lenders also receive a 3 percent upfront PIK commitment fee along with a 2 percent exit fee payable in cash. The DIP matures November 15, 2013. The agent on the DIP loan is US Bank. Upon LightSquared receiving court approval of the DIP, LightSquared Inc. prepetition lenders will see their accrued interest rise to 17 percent on their defaulted loans from the prepetition rate of 15 percent. There was $322.4 million outstanding under the LightSquared Inc. prepetition credit facility at bankruptcy filing. On June 13, Judge Shelly Chapman gave LightSquared some financial breathing room by approving a consensual agreement between LightSquared and a group of LightSquared LP lenders to access about $190 million of cash collateral at LightSquared LP, the company's main operating subsidiary. Being able to draw upon this cash would buy additional time for the company to address the Federal Communications Commission's concerns (FCC) regarding the disruption to global positioning systems caused by LightSquare's network transmissions. In February, the FCC indefinitely suspended LightSquared's attempts to build the land-based portion of the company's wireless network after receiving complaints from numerous users of global positioning systems. LightSquared LP lenders had earlier offered to distribute cash as a DIP alternative from the operating company to LightSquared Inc. in exchange for priming liens on the holding company's collateral. This offer was refused by the LightSquared Inc. lenders. Link this Share this Digg this Email Reprints

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