* Icahn sells $250 mln LightSquared debt -sources
* Creditors continue LightSquared talks -sources
(Adds details about Icahn debt, background)
By Sinead Carew and Matthew Goldstein
NEW YORK, May 6 (Reuters) – Billionaire investor Carl Icahn
has sold his $250 million debt holdings in Philip Falcone’s
telecom start-up LightSquared while Falcone continues
to negotiate with creditors to try to avoid a debt default,
according to sources familiar with the matter.
News of Icahn’s debt sale comes as remaining creditors
agreed to a second week long extension until May 14 of their
talks with Falcone about reducing his firm, Harbinger Capital
Partners’ 96 percent equity stake in LightSquared.
One hedge fund representative said some constructive
progress has been made in talks that began in earnest between
LightSquared and its creditors two weeks ago over a potential
default on $1.6 billion of LightSquared debt.
Meanwhile Icahn, who was seen as one of the leaders in
pushing for Falcone to reduce his role in LightSquared, appears
to have made a big profit on he sale, according to sources
familiar with the matter.
The investor on Thursday sold his debt for about 60 cents on
the dollar after buying the position when it was trading in the
low 40 cents range only months before, several people familiar
with the matter said.
Two sources familiar with the matter said that the buyer of
Icahn’s debt was Sound Point Capital, a small investment firm
led by Stephen Ketchum, who formed the company in 2009.
Ketchum, who was previously head of media investment banking
at Banc of America, was not immediately available for comment.
Nor was a representative for Icahn. A spokesman for Harbinger
was not immediately available to comment on the extension.
UNCERTAIN FUTURE
LightSquared’s future was thrown into doubt in February
after the U.S. Federal Communications Commission said it would
revoke the start-up’s permission to use its spectrum licenses to
build a high-speed wireless network because tests had shown that
it would risk interfering with Global Positioning Systems.
These systems support crucial services such as aviation
safety and military systems as well as devices used in
industries such as construction and agriculture.
The fate of LightSquared, whose business model was dependent
on being able to build a wireless network, is an important
concern for investors in Falcone’s $3.8 billion hedge fund
Harbinger, which has sunk some 60 percent of its money into the
telecom startup.
After the FCC action, LightSquared debt holders, including
Icahn and hedge fund manager David Tepper, had initially
threatened to declare a default on the $1.6 billion in loans if
they could not reach an agreement by April 30.
Last week, the creditors already extended that deadline once
until May 7 before extending it again.
Last year, Harbinger posted a 47 percent decline in value,
largely because of a write-down on the value of the LightSquared
investment.
LightSquared’s predicament is also being closely watched by
the telecommunications industry, which says it is crying out for
access to additional wireless airwaves to support high-speed
data services.
(Editing by Maureen Bavdek and Marguerita Choy)
