Charlie Ergen may succeed where Phil Falcone fell short.
Late last week, the satellite guru quietly scooped up $350 million worth of debt in LightSquared, the troubled wireless startup controlled by Falcone’s Harbinger Capital hedge fund, The Post has learned.
Ergen, whose Dish Network already owns licenses for wireless spectrum, is seeking to build a national network that could compete with the likes of Verizon and AT&T. Falcone harbored similar ambitions before getting locked into a battle with regulators and debtholders.
For several years, Ergen has been cobbling together spectrum to launch his network by buying up bankrupt satellite companies. His latest move has some industry watchers speculating he could be angling to combine LightSquared’s spectrum with his own. Neither Ergen nor a spokeswoman returned a request for comment.
A LightSquared investor told The Post that Ergen bought the debt Thursday and Friday with the help of his former banker, Stephen Ketchum. Ketchum heads Manhattan-based credit hedge fund Sound Point Capital Management, which had $178 million in assets as of the end of March — short of what the firm would have needed to make the purchase on its own.
Ketchum didn’t return a request for comment.
Reuters first reported on Sound Point’s recent acquisition of $250 million of LightSquared’s $1.6 billion first lien loan, a slice that was previously owned by billionaire investor Carl Icahn, who flipped it for a quick profit.
Icahn bought a piece of LightSquared’s debt for as little as 40 cents on the dollar late last year and sold it for closer to 60 cents on the dollar, sources said.
Yesterday, LightSquared’s debt jumped to nearly 70 cents following speculation that Ergen could be dipping his toes in the pool.
In a Dish earnings call yesterday, Ergen sidestepped an analyst’s question about a potential play for LightSquared, saying he was focused on getting regulatory approval for his network.
“I guess I’d answer it from a big-picture perspective, which is, our focus right now is really on getting the FCC approval,” he said.
Ergen’s entrance comes at a tumultuous time for LightSquared. The company’s launch plans were thwarted in February after the Federal Communications Commission said it would revoke the startup’s temporary approval to build its 4G network.
The regulatory setback has triggered an intense confrontation between Falcone, who is LightSquared’s largest equity owner, and holders of the $1.6 billion first lien, which include investment firm Capital Research and hedge fund Appaloosa Management.
Debtholders want Falcone out as the public face of the company, and they want him to give up a good chunk of his 96 percent equity stake, which he owns through his hedge fund Harbinger Capital Management.
The bondholders have threatened to throw the company into bankruptcy if they don’t get their way, but Falcone has threatened to beat them to the punch with a voluntary bankruptcy.
Falcone didn’t return a request for comment.