Embattled wholesale mobile broadband carrier LightSquared has once again made news, as billionaire founder Philip Falcone is considering stepping down from the company in order to avoid bankruptcy and possible subsequent liquidation according to a report filed by The Wall Street Journal. The latest action is being considered as the company’s debt-term violation comes up for payment today with Falcone seeking a last minute extension to help pay for the debt covenant, which would give the company anywhere from a week to 18 months to pay the overdue covenant, contingent on the success of the negotiations.
Should the extension be granted, Falcone is expected to step down from the company’s board in exchange and would add to the growing problems the company is facing following the revocation of its provisional approval to roll out LTE service using satellite spectrum, which was rejected after the FCC considered the rollout detrimental to the public interest after multiple tests confirmed that the network interfered with the operation of GPS equipment for civilian and military use.
LightSquared’s Falcone has also made public his intentions to sue the regulator for the rejection of the network rollout, which caused its previous partner in Sprint to pay back the $65 million agreement fee the carrier received in order to host LightSquared’s network and the loss of wholesale customers that were previously under contract to LightSquared to resell 4G LTE service, although Falcone has his own litigation problem to deal with, as shareholders in his Harbinger Capital investment firm are also in litigation against him regarding the promises made regarding the viability of the network and its profit potential.
With LightSquared facing bankruptcy, this places further doubt on the chances that the company will recover from the ordeal as it has already lost executive staff and has laid off almost half of its employees in order to preserve cash, yet LightSquared still aims to rollout its network, should it be able to move on from its current problems.