Hedge fund manager Philip Falcone is expected to eventually step aside as the public face of LightSquared in an effort to keep the foundering wireless broadband effort from defaulting on debt, The Wall Street Journal reports.
The move is expected to prompt the company's lenders to approve a debt extension that would keep the company from having to file for bankruptcy protection, people familiar with the matter told the Journal. The holders of LightSquared's $1.6 billion in debt have given Falcone until 10 a.m. Monday to strike a deal for restructuring Harbinger's 96 percent equity control of the company, a person familiar with the situation told Reuters.
Falcone, whose hedge fund Harbinger Capital is the largest stakeholder in LightSquared, said earlier this month thatas he tries to keep the company alive.
CNET contacted LightSquared for comment, and we'll update the report when we get more information.
LightSquared, which has been battling the GPS industry over claims that its network interferes with aviation and navigation systems, lost about $427 million in the first nine months of 2011. The Reston, Va., companyin February when the FCC announced it would "suspend indefinitely" the startup's conditional waiver to operate after it was determined that LightSquared's interference with other devices, including GPS devices, was unavoidable.
While LightSquared vowed to fight on to win approval for the waiver from the FCC, the company's CEO, Sanjiv Ahuja,just two weeks later. That news followed the revelation that the company planned to slash its workforce by 45 percent to conserve cash.
Things went from bad to worse last month whenwith LightSquared and return $65 million in prepayments. The deal's cancellation left LightSquared without a major partner for its effort to build a national wireless broadband network using satellite spectrum.