Charlie Ergen, in a last-ditch effort on Monday to hang on to his $850 million investment in LightSquared, painted nemesis Phil Falcone as a schoolyard bully bent on placing a financial hurt on the satellite TV mogul for personal gain.
In a face-off at Manhattan Bankruptcy Court, Ergen’s lawyer questioned Falcone about e-mails the hedge-fund investor swapped with investors and advisers of the bankrupt high-speed telecom network — some of which showed the investor trying to get the others to cut Ergen’s $850 million investment down to size in order to make the restructuring work for everyone else.
One e-mail showed Falcone griping about his position in a plan that has since been tossed — saying it wasn’t enough to justify his legal battle with Ergen.
“If it doesn’t improve the equity return, what was the point of going to court and jamming Charlie?” Falcone said in a January 2014 e-mail to Drew McKnight, a managing director at Fortress Investment Group, which is funding the LightSquared reorganization plan.
In another e-mail, LightSquared consultant Jerry Abbruzzese brought Falcone a new plan, saying: “We tell Ergen that he takes a haircut to the $700mm … or we go for the jugular.”
Ergen bought his $850 debt position in LightSquared with $700 million from his own personal fortune, so any loss will hit him personally.
The hearing Monday was the last before Judge Shelley Chapman rules on the company’s $2.65 billion reorganization plan — and whether to push Ergen toward the back of the line of those getting paid out under the plan.
Ergen has opposed the plan because it seeks to pay him differently than other senior bank debt holders, who will get paid in full, in cash.
Falcone, whose Harbinger Capital controls LightSquared, is seeking to push Ergen away from the payout line because Ergen allegedly tried to buy debt in the telecom company for his Dish Network.
Such a move was barred by covenants in the bonds.
Ergen denies the allegation.
If LightSquared succeeds, Ergen could lose a chunk of his investment.
Falcone and LightSquared have sued Ergen in a separate but related case over the legitimacy of his debt purchases, saying he pushed LightSquared into bankruptcy to pave the way for Dish to buy its assets cheap.
Falcone has been fighting to retain control of LightSquared since his hedge fund, Harbinger Capital Management, invested $3 billion in the company several years ago, making Harbinger the largest stockholder.
The new plan would give Harbinger a 30 percent equity stake, which it can raise to 36 percent with a $150 million equity investment, Falcone said Monday.