Cerberus Capital Management and Solus Alternative Asset Management on Tuesday proposed a new plan to restructure bankrupt wireless venture LightSquared, with the support of billionaire Charles Ergen, LightSquared's largest lender, Reuters reported yesterday. The two private-equity firms would pay Ergen cash to acquire $950 million of Ergen's $1 billion debt claim on the company. The two firms would then receive notes from the company ranking behind other LightSquared lenders in repayment priority. They would also supply new financing and take 34 percent of new equity to be issued by LightSquared as part of the proposed restructuring. The plan is designed to compete with a LightSquared-backed one whose fairness is the subject of an ongoing trial in U.S. Bankruptcy Court in Manhattan. That plan is backed by Fortress Investment Group and Centerbridge Partners, who would take the same 34 percent stake under their proposal. LightSquared's three-year bankruptcy is closely watched because its main asset, wireless spectrum, is considered very valuable. Just how valuable it is, and what it can be used for, is fiercely debated among stakeholders, and the bankruptcy will determine who ultimately controls it.
