Really Rocket Science

Sure, it all makes sense now.

LightSquared had a plan to use frequencies for mobile services. That turned into a fight with the GPS industry. They fucked with the farmers, too.

Just before they filed for bankruptcy protection, they paid Dennis Hastert’s lobbying firm $200,000 to keep an eye on GPS legislation. And the science behind the interference issue was real.

All this seems like a waste of money, right? Think again and bring the bankruptcy fees. Case Number 1:12-bk-12080 got their exit financing approved on 2 June 2015, so the end is near. The FCC is asking for comment on the available frequencies.

Who’s involved in this bankruptcy? These are the entities for Reston, VA-based LightSquared:

LightSquared Inc.
LightSquared
Investors Holdings Inc.
One Dot Four Corp.
One Dot Six Corp.
SkyTerra Rollup LLC
SkyTerra Rollup Sub LLC
SkyTerra Investors LLC
TMI Communications Delaware, Limited Partnership
LightSquared GP Inc.
LightSquared LP
ATC Technologies, LLC
LightSquared Corp.
LightSquared Finance Co.
LightSquared Network LLC
LightSquared Inc. of Virginia
LightSquared Subsidiary LLC
Lightsquared Bermuda Ltd.
SkyTerra Holdings (Canada) Inc.
SkyTerra (Canada) Inc.
One Dot Six TVCC Corp.

Are we counting the “lawyer dollars” now? More, please. Here are the people on the other side of the table…

Creditor
ACE American Insurance Company and other members of the ACE group of companies
Represented by:
Karel S. Karpe, KarpeLaw

Creditor
APA Properties No. 10, LP
Represented by:
Patrick J. Potter, Pillsbury Winthrop Shaw Pittman LLP

Creditor
ASM Capital IV, L.P.
Represented by:
Douglas Wolfe, ASM Capital, LP

Creditor
ASM Capital, L.P.
Represented by:
Douglas Wolfe, ASM Capital, LP

Unknown
AT&T Corp.
Represented by:
David A. Rosenzweig, Norton Rose Fulbright US LLP

Creditor
Ad Hoc Group of LightSquared LP Lenders
Represented by:
Glenn M. Kurtz, White & Case, LLP
Julia M Winters, White & Case LLP

Unknown
Ad Hoc Preferred LP Group
Represented by:

Creditor
Alcatel-Lucent USA, Inc.
Represented by:
Alyse M. Aruch, McCarter & English

Unknown
Donna Pelligrini Alderman
Represented by:
Joel M Melendez, Molo Lamken LLP

Financial Advisor
Alvarez & Marsal North America, LLC
Represented by:
Karen Gartenberg, Milbank, Tweed, Hadley & McCloy LLP

Unknown
BDC Parkridge LLC
Represented by:
Anthony D. Boccanfuso, Arnold & Porter

Stockholder
Blue Line DZM Corp.
Represented by:
Paul Nii-Amar Amamoo, Kasowitz, Benson, Torres & Friedman LLP
David M. Friedman, Kasowitz, Benson, Torres & Friedman, LLP

Creditor
Boeing Satellite Systems, Inc.
Represented by:
Todd J. Rosen, Munger, Tolles & Olson LLP
Bradley Schneider, Munger, Tolles & Olson, LLP

Creditor
Cates Strategy Group, LLC
Represented by:
Leon S. Jones, Jones & Walden, LLC

Interested Party
Centaurus Capital LP
Represented by:
Jeffrey S. Sabin, Venable LLP

Claims and Noticing Agent
Kurtzman Carson Consultants LLC, Claims Agent
Represented by:

Unknown
Clerks Office of the U.S. Bankruptcy Court
Represented by:
Creditor
Raymond Coburn
Represented by:

Creditor
Comerica Bank
Represented by:
Ronald Scott Beacher, Pryor Cashman LLP
Conrad Chiu, Pryor Cashman LLP

Unknown
Covington & Burling LLP
Represented by:
Ronald A. Hewitt, Covington & Burling LLP

Unknown
Crown Castle USA Inc.
Represented by:
Leslie Ann Berkoff, Moritt, Hock & Hamroff, LLP

Creditor
DACA VI LLC
Represented by:

Unknown
DISH NETWORK CORPORATION
Represented by:
Brian D. Glueckstein, Sullivan & Cromwell LLP

Attorney
DLA Piper LLP (US)
Represented by:
Gregg M. Galardi, DLA Piper LLP (US)

Creditor
Dallas County
Represented by:
Elizabeth Weller, Linebarger Goggan Blair & Sampson, LLP

Creditor
Debt Acquisition Co of America V, LLC
Represented by:

Interested Party
Deere & Company
Represented by:
Philip Le B. Douglas, Jones Day

Attorney
Dentons Canada LLP
Represented by:
Karen Gartenberg, Milbank, Tweed, Hadley & McCloy LLP

Unknown
Dickstein Shapiro LLP
Represented by:
Shaya M. Berger, Dickstein Shapiro, LLP

Mediator
Robert D. Drain
Represented by:

Interested Party
Charles W. Ergen
Represented by:
James C. Dugan, Willkie Farr & Gallagher LLP

Other Prof.
Ernst & Young LLP
Represented by:
Karen Gartenberg, Milbank, Tweed, Hadley & McCloy LLP
Lars A. Peterson, Foley & Lardner LLP
John A. Simon, Foley & Lardner LLP

Unknown
FCDB LSQ LLC
Represented by:

Creditor
Fortress Credit Investments I Ltd., Fortress Credit Investments II Ltd., Fortress Credit Funding IV LP, Fortress Credit Opportunities I LP, Worden Master Fund LP, Worden Master Fund II LP, Drawbridge
Represented by:

Unknown
Fortress Investment Group LLC
Represented by:
Kristopher M. Hansen, Stroock & Stroock & Lavan LLP

Other Prof.
Fraser Milner Casgrain LLP
Represented by: Interested Party
Garmin International, Inc.
Represented by:
Philip Le B. Douglas, Jones Day
Paul Bartholomew Green, Jones Day

Unknown
Gibson, Dunn & Crutcher LLP
Represented by:
Michael A. Rosenthal, Gibson, Dunn & Crutcher LLP

Stockholder
HGW US Holding Company, L.P.
Represented by:
Paul Nii-Amar Amamoo, Kasowitz, Benson, Torres & Friedman LLP
David M. Friedman, Kasowitz, Benson, Torres & Friedman, LLP

Stockholder
Harbinger Capital Partners LLC
Represented by:
Paul Nii-Amar Amamoo, Kasowitz, Benson, Torres & Friedman LLP
Daniel A. Fliman, Kasowitz, Benson, Torres & Friedman LLP
David M. Friedman, Kasowitz, Benson, Torres & Friedman, LLP

Unknown
Harbinger Capital Partners LLC, et al.
Represented by:
Ronit J. Berkovich, Weil, Gotshal & Manges LLP
Debra A. Dandeneau, Weil, Gotshal & Manges, LLP

Stockholder
Harbinger Capital Partners SP, Inc.
Represented by:
Paul Nii-Amar Amamoo, Kasowitz, Benson, Torres & Friedman LLP
David M. Friedman, Kasowitz, Benson, Torres & Friedman, LLP

Unknown
Intelsat Corporation
Represented by:
Stephen B. Selbst, Herrick, Feinstein LLP

Interested Party
Jacksonville Police and Fire Pension Fund
Represented by:
Michael S. Etkin, Lowenstein Sandler LLP
Cassandra M. Porter, Lowenstein Sandler LLP

Unknown
STEPHEN KETCHUM
Represented by:
Charles E. Bachman, O’Melveny & Myers LLP
Peter M. Friedman, O’MELVENY & MYERS LLP

Attorney
Kirkland & Ellis LLP
Represented by:
Paul M. Basta, Kirkland & Ellis, LLP

Christopher Marcus, Kirkland & Ellis LLP

Joshua Sussberg, Kirkland & Ellis LLP

Unknown
Kurtzman Carson Consultants LLC
Represented by: Interested Party
L-Band Acquisition, LLC
Represented by:
Brian D. Glueckstein, Sullivan & Cromwell LLP
Rachel C. Strickland, Willkie Farr & Gallagher LLP

Unknown
Latham & Watkins LLP
Represented by:

Debtor
LightSquared Inc.
Represented by:
Matthew Scott Barr, Milbank, Tweed, Hadley & McCloy
Paul M. Basta, Kirkland & Ellis, LLP
Karen Gartenberg, Milbank, Tweed, Hadley & McCloy LLP
Christopher Marcus, Kirkland & Ellis LLP
Alan Stone, Milbank Tweed Hadley & McCloy LLP
Mitchell S. Bigel, Myers Bigel Sibley & Sajovec, P.A.

Creditor
Liquidity Solutions, Inc.
Represented by: Unknown
MAST Capital Management LLC
Represented by:
Philip Dublin, Akin, Gump, Strauss, Hauer & Feld, LLP
Lawrence S. Robbins, Robbins Russell Englert Orseck Untereiner

Interested Party
Melody Business Finance, LLC
Represented by: Attorney
Milbank, Tweed, Hadley & McCloy LLP
Represented by:
Matthew Scott Barr, Milbank, Tweed, Hadley & McCloy

Creditor
Missouri Department of Revenue
Represented by:
Steven A. Ginther, Missouri Department of Revenue

Financial Advisor
Moelis & Company LLC
Represented by:
Karen Gartenberg, Milbank, Tweed, Hadley & McCloy LLP

Unknown
New York State Department of Labor
Represented by:

Creditor
One Beacon Street Limited Partnership
Represented by:
Douglas B. Rosner, Goulston & Storrs, P.C.

Creditor
Oracle America, Inc.
Represented by:
Shawn M. Christianson, Buchalter Nemer Fields & Younger
Amish R. Doshi, Magnozzi & Kye

Creditor
James Paull, IV
Represented by:
Lawrence A. Katz, Leach Travell Britt PC

Creditor
Jay Paull, IV
Represented by:
Lawrence A. Katz, Leach Travell Britt PC

Creditor
John Paull
Represented by:
Lawrence A. Katz, Leach Travell Britt PC

Unknown
Pillsbury Winthrop Shaw Pittman LLP
Represented by:
Bruce D. Jacobs, Pillsbury Winthrop Shaw Pittman LLP
Brandon Johnson, Pillsbury Winthrop Shaw Pittman LLP
Matthew J Oliver, Pillsbury Winthrop Shaw Pittman LLP
Patrick J. Potter, Pillsbury Winthrop Shaw Pittman LLP
Dania Slim, Pillsbury Winthrop Shaw Pittman LLP

Unknown
Providence TMT Special Situations Fund LP and TMT Debt Opportunity Fund II LP, investment funds managed by affiliates of Providence Equity Partners LLC (collectively, the “Providence Funds”)
Represented by:
Emanuel C. Grillo, Baker Botts L.L.P.

Creditor
SBA Structures Inc. and SBA Towers III LLC
Represented by:
Lucian Murley, Saul Ewing LLP

Interested Party
SIG Holdings, Inc.
Represented by:
Nicholas E. Baker, Simpson Thacher & Bartlett LLP
Sandeep Qusba, Simpson Thacher & Bartlett LLP

Interested Party
SP Special Opportunities, LLC
Represented by:
James C. Dugan, Willkie Farr & Gallagher LLP
Tariq Mundiya, Willkie Farr & Gallagher LLP
Rachel C. Strickland, Willkie Farr & Gallagher LLP

Interested Party
Lili Schad
Represented by:
Scott D. Cousins, Bayard, P.A.
Kevin D. Galbraith, Zamansky & Associates LLC
Jacob H. Zamansky, Zamansky & Associates, LLC

Unknown
Sandeep Singh
Represented by:

Unknown
Solus Alternative Asset Management LP
Represented by:
Malek Schiffrin LLP, Malek Schiffrin LLP

Interested Party
Sound Point Capital Management, L.P.
Represented by:
Charles E. Bachman, O’Melveny & Myers LLP
Peter M. Friedman, O’MELVENY & MYERS LLP

Unknown
Special Committee of the Board of Directors of LightSquared Inc. and LightSquared GP Inc.
Represented by:
Paul M. Basta, Kirkland & Ellis, LLP
Joshua Sussberg, Kirkland & Ellis LLP

Interested Party
TR Capital Management, LLC
Represented by: Creditor
Tennessee Department of Revenue
Represented by:
Marvin E. Clements, Jr., Office of the Tennessee Attorney General

Unknown
The Law Office of John T. Whelan, LLC
Represented by:
John T. Whelan, The Law Office of John T. Whelan LLC

Interested Party
The U.S. GPS Industry Council
Represented by:
Philip Le B. Douglas, Jones Day

Interested Party
Trimble Navigation Ltd.
Represented by:
Philip Le B. Douglas, Jones Day

Unknown
U.S. Bank National Association
Represented by:
Philip Dublin, Akin, Gump, Strauss, Hauer & Feld, LLP

John W. Weiss, Alston & Bird LLP

Creditor
UBS AG
Represented by:
Adam J. Goldberg, Latham & Watkins, LLP
David S. Heller, Latham & Watkins

U.S. Trustee
United States Trustee
Represented by:
Susan D. Golden, Office of United States Trustee SDNY

Unknown
United States of America on behalf of the Federal Communications Commission
Represented by:
Alicia M. Simmons, U.S. Attorney’s Office, SDNY

Creditor
Universal Service Administrative Company
Represented by:
Michael L. Schein, Vedder Price, P.C.

Unknown
Weil, Gotshal & Manges LLP
Represented by:
Debra A. Dandeneau, Weil, Gotshal & Manges, LLP

Interested Party
Wilmington Savings Fund Society, FSB
Represented by:
Darren T. Azman, McDermott Will & Emery LLP

Unknown
Wilmington Trust, National Association
Represented by:
David S Forsh, Pillsbury Winthrop Shaw Pittman LLP

Earlier this month, Charlie talked about how he liked Sprint’s potential to be successful in wireless.

Not really: I think he wants Son to pay more for it!

The real value in wireless communications is in its spectrum licenses. Without that, you don’t have much to grow with. Add ready-to-go infrastructure to your spectrum and you can make some dough. Dish’s video business has probably reached its limit and they’ve been accumulating spectrum for an eventual “wireless play.” Competing against the cable and telco “triple-play” (voice, video, data) — or quad-play of Verizon and AT&T (landline voice, video, data, wireless/mobile) — left Dish an an inherent disadvantage. Without any landline business, using satcom for Internet is inefficient. If, however, Dish could make a “modern triple-play” (video, wireless data, wireless voice) then it could retain a substantial portion of its subscriber base. In general, triple-plays help reduce churn rates.

T-Mobile is on a tear; five quarters of 1.5 million net-adds. They just need some more spectrum and Dish has it — and cash flow to help pay down debt. LightReading has the best analysis:

The appeal of the Dish position is that the satellite provider holds 50MHz of spectrum in the US — 40MHz in the AWS-4 band and 10MHz in the H-Band — that is very close to the AWS spectrum that T-Mobile has been deploying its 4G LTE network in.

“We could certainly very rapidly deploy on his spectrum,” Carter noted.

This would give the pair the opportunity to offer really large LTE channels for faster over-the-air services, possibly doubling up on the 2x20MHz LTE channels that T-Mobile can offer today. Although Carter noted that the operator will move beyond that by itself anyway, without offering much further detail.

Of course, that would mean striking a deal between the two and — as Carter noted — Ergen is a “tough negotiator.” Still, he opined, it would be very difficult and expensive for Dish to deploy a wireless network on its own, and the provider is running out of time to strike a 4G deal with a partner.

Everybody seems to agree.

The timing is perfect for Dish to buy T-Mobile and turn their wireless service into a very strong #3 quickly — and grow it to some day become #2.

FightSquared is about to be resolved.

After “lawyering up” for the last few years, here comes the judge. She suggested everybody coffee-up for Thursday’s hearing.

Don’t call him “Nixon,” as Charlie seldom ever loses a hand in this game.

Here’s the latest tit-for-tat, via The Deal Pipeline…

“Mr. Ergen’s testimony cannot be believed,” said debtor counsel Andrew Leblanc of Milbank, Tweed, Hadley & McCloy LLP.

Dish Network Corp. chairman Ergen, who holds more than $1 billion in secured claims including interest, is the sole objector to the reorganization of Philip Falcone-backed LightSquared.

Leblanc told the court that Ergen impeached himself 27 times during testimony earlier in 2014 by disagreeing with his deposition before the trial.

LightSquared and supporting creditors are trying to convince Judge Shelley Chapman of the U.S. Bankruptcy Court for the Southern District in New York that the debtor should be able to give Ergen different compensation for his secured claims than other creditors holding secured debt. The plan supporters also want Chapman to designate, or disqualify, Ergen’s vote.

The debtor plans to repay Ergen’s first-lien debt with a third-lien note that would not pay cash for seven years, unless it were refinanced. Other secured creditors would receive cash payments in full shortly after confirmation of the plan.

Ergen’s counsel, Rachel Strickland of Willkie Farr & Gallagher LLP, called the plan “totally unjust and in violation of the [Bankruptcy] Code,” in court Monday.

LightSquared sought Chapter 11 protection two years ago. The debtor was unable to fund its business when the Federal Communications Commission withdrew support for a proposal that would allow LightSquared to use is spectrum — which is licensed for hybrid satellite-terrestrial service — for wholesale wireless broadband service.

The confirmation hearing has focused as much on Ergen’s alleged misdeeds as it has on the plan supported by Fortress Investment Group, Melody Capital Advisors LLC, Philip Falcone’s Harbinger Capital Partners LLC and JPMorgan Chase & Co.

LightSquared argues that the plan, which incorporates $2.65 billion in new financing, compensates all creditors fully and fairly.

Ergen’s lawyers told Chapman that the debtors are buying the votes of junior classes by giving them better treatment than the Dish chairman. “They are patting themselves on the back for get a fully consensual plan?” Strickland asked the court. “They are trying to work around the [Bankruptcy] Code.”

Strickland called the effort to divide the secured debt into two classes a “completely unprecedented maneuver.”

LightSquared and creditors argue that Ergen violated a credit agreement by purchasing the claims, because terms of the loan blocked competitors such as Dish from purchasing the debt.

The debtor also accuses Ergen of disrupting its reorganization, and notes that another judge in the Southern District of New York designated Dish’s vote in the reorganization of DBSD North America Inc. Dish wound up buying the satellite communications company.

Dish offered $2.22 billion to purchase LightSquared’s most attractive portfolio of wireless licenses last year. LightSquared said the offer undervalued the debtor, though a group of secured creditors proposed a reorganization of a unit of the company built around Ergen’s offer.

Dish withdrew the bid in January, after termination dates for the deal passed. Chapman ruled that the company had the legal right to terminate.

LightSquared has negligible operations. The value of the debtor’s estates lies in its spectrum, and will swing widely depending on the FCC’s ruling on licensing.

Leblanc told Chapman that Ergen plays “the long game,” and would attempt to buy the company on the cheap if he could disrupt the reorganization plan. The lawyer noted that Dish’s purchase of DBSD played out over a long period, and predicted that the satellite TV company still has an interest in LightSquared and its wireless spectrum.

Know when to hold em, know when to fold em.

There are a lot of very smart people in the satcom business. Rocket scientists, engineers and business-heads find ways to make money. Good money. We’re talking 80% EBITDAs. You don’t have margins like that without knowing what you’re doing.

You’ve got to plan ahead years in advance, making sure your space assets are fully utilized. The radio spectrum you own is the most prized “asset” you’ve got. You can always build more spacecraft, but you can’t make more spectrum. Unless you find ways to either make better use of what you got or go out and get spectrum that’s not being used effectively.

Great. Now go out and sell it, baby!

Pricing is the real challenge. New satcom services priced to assure an 80% EBITDA are destined to fail, as they’re based on costs incurred many years before service launch. And what do we know of today’s data communications pricing schemes? They move fast. Very fast. Extremely competitive, too, so prices move lower and lower. Iridium? Financial disaster: pricing was based on mobile costs-per-minute in the 1990’s. When they launched, people were paying a fraction of that. As Iridium was about to go belly-up, the U.S. DoD steps in and says “we’ll carry you after bankruptcy.” Why? Iridium covered the globe with a diverse path for communications, and that’s very valuable. But not at that old price.

Diversity is for when other communications fail or are unavailable. We always thought a combination iPhone that uses the S-band for connectivity when regular signal or WiFi are not available would be oh so cool. So maybe now our vision might be realized.

With Dish Network as the “stalking horse bidder” in the TerreStar Networks bankruptcy auction, they see something not readily apparent to others. It’s the spectrum, stupid. Yes, TerreStar has S-band spectrum for CONUS service, but they also have authority for a combined satellite and ancillary terrestrial component (ATC) service. The FCC granted authority in January, 2010. This is really good and it comes without the GPS interference crap that LightSquared has to contend with.

Good move. Dish has a chance to sell mobile data plans with their current TV service packages — or perhaps future packages for on-demand (Blockbuster) or à la carte services to appeal to the growing number of cord-cutters.

Two scenarios emerge: (1) Dish Network adds reasonably-priced mobile data plans to satellite TV services, and (2) an alternate mobile telecom infrastructure emerges to augment today’s overloaded terrestrial networks.

Dean Olmstead was a fan of TerreStar, so he probably had much to do with laying plans to make this kind of move before he passed on.