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LightSquared Alters Chapter 11 Bid To Keep Wireless Alive

New York – LightSquared proposed a new plan to exit Chapter 11 by raising $2.75 billion in loans and at least $1.25 billion in equity investment, replacing a plan that included a spectrum auction in which Dish Networks was the highest bidder.

The plan, filed in Manhattan’s U.S. Bankruptcy Court, would keep LightSquared’s plans for building a wireless network alive, but the plan is conditioned on federal approvals, including a spectrum swap proposed by LightSquared to enable it to build out its network.

 Last fall, LightSquared sought approval to share 5MHz of spectrum used by the National Oceanic and Atmospheric Administration (NOAA).

In return LightSquared would relinquish the right to use 10MHz of its spectrum closest to the GPS band to prevent interference with GPS equipment. The swap, coupled with LightSquared’s other 25MHz of spectrum, would enable it to build out its terrestrial network.

 Dish, however, also wants to build its own terrestrial wireless network and is seeking additional spectrum to do so. Dish previously bid on LightSquared’s spectrum assets and emerged as the only qualified bidder with a $2.2 billion offer and terms that LightSquared apparently found unappealing.

 LightSquared later canceled the auction.

The debt and equity raised by LightSquared’s latest bankruptcy plan would pay off the allowed claims of current LightSquared investors and debtors, a Wall Street Journal report said.

LightSquared filed Chapter 11 in May 2012 after the government concluded the company’s planned terrestrial network, using spectrum originally set aside for satellite services, could interfere with GPS products. The FCC later revoked LightSquared’s license to use the spectrum for a terrestrial network.