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Bankrupt LightSquared Resumes Payments to Inmarsat
KOUROU, French Guiana — Bankrupt satellite/terrestrial wireless broadband provider LightSquared has resumed cash payments to mobile satellite services operator Inmarsat after a two-year hiatus following LightSquared’s filing for Chapter 11 reorganization, Inmarsat said April 4.
In a notice to the London Stock Exchange, London-based Inmarsat said LightSquared made a $5 million deposit April 3 to reactivate an agreement with the two companies on the reorganization of L-band radio spectrum.
Inmarsat has agreed to allow spectrum it uses to be rearranged to better suit LightSquared’s business plans. The agreement will oblige Inmarsat to incur costs related to hardware modifications for some of its customers and other charges.
In return for these concessions — and before Inmarsat had incurred many of the presumed charges — LightSquared has made substantial payments to Inmarsat. None of those payments will be returned even if LightSquared is forced to shut down permanently, Inmarsat officials have said.
Payments under the spectrum-sharing agreement were suspended, by mutual agreement of the two companies, in April 2012. LightSquared filed for bankruptcy protection the following month. Prospective new owners are still arguing about the company’s future.
Inmarsat has told shareholders that whatever LightSquared’s future ownership, as long as LightSquared’s business plan has any hope of being realized it likely will not scrap the deal with Inmarsat. Doing so, Inmarsat has said, would essentially force LightSquared to abandon its plans to develop a network of ground-based towers to provide mobile broadband service that would use a satellite for connectivity in rural areas.
Inmarsat said LightSquared, having now reactivated its agreement, will owe Inmarsat $12.5 million every three months, plus an additional $5 million per quarter for the first 10 quarters.
LightSquared has been better than a cash cow for Inmarsat, according to investment analysts, inasmuch as Inmarsat need not actually visit the cow. The cash drops into Inmarsat’s accounts like manna from heaven.
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