UPDATE 1-RLPC: LightSquared seeks Fortress-sponsored exit loan

Fri Dec 20, 2013 4:32pm EST

By Billy Cheung and Michelle Sierra

NEW YORK Dec 20 (Reuters) - Bankrupt wireless communications firm LightSquared Inc is seeking to raise a $2-2.5 billion senior secured first-lien term loan backing a Fortress Investment Group-sponsored bankruptcy exit plan, sources said Friday.

JP Morgan and Credit Suisse are sounding out investors on the financing that would help Fortress purchase the company out of bankruptcy, sources said. The banks are not committed or contracted to providing or arranging the credit, the same sources noted.

LightSquared declined to comment.

LightSquared had attempted to raise a $3 billion exit loan in June and July through Jefferies but pulled the financing when Dish Chairman Charlie Ergen emerged as the largest creditor for the company. The Jefferies loan would have backed an exit plan sponsored by majority shareholder Harbinger Capital Partners.

Ergen's involvement and a subsequent $2.2 billion July bid by Dish for LightSquared's operating assets, combined with the expiration of the exclusivity period for the company to put forth a restructuring plan, allowed the company's biggest creditor group to push for LightSquared's sale.

The uncertainty around LightSquared's attempt to remain independent helped derail the Harbinger financing, leading to lawsuits filed by LightSquared and Harbinger against Dish, Ergen and related investment affiliates.

As per the Fortress-sponsored exit financing plan, LightSquared is offering a three-year loan with a 12 percent coupon, all payable-in-kind. The loan would be sold at a discount price of between 95 and 97.

The maturity could be extended by a year, subject to a minimum liquidity test. Lenders would receive a 1.5 point fee for agreeing to an extension.

Given that LightSquared's wireless network build out plans remain suspended by the Federal Communications Commission (FCC), lenders have been asked to commit to the deal for six months with a potential three-month extension.

Lenders would be paid a 100bp fee upon confirmation of the Fortress-backed restructuring plan in bankruptcy court. If LightSquared exercises the commitment extension while in bankruptcy, lenders would receive a 50bp fee.

In addition, the loan would be subject to a minimum liquidity covenant during the extension period.

The exit loan would not be callable for the first year and then would have 106 and 103 call protection for the next two years.

The closing of the loan depends on additional equity injected into the company post-bankruptcy and the FCC allowing LightSquared to resume developing its spectrum.

A pre-taped roadshow will be available beginning December 26 with a lender call scheduled for January 6. Fortress and LightSquared would be available to field potential lenders' questions upon request before the lender call.

The company is asking for lender commitments by January 8.

• Link this
• Share this
• Digg this
• Email
• Print
• Reprints

16.47 | 0 komentar | Read More

UPDATE 2-Detroit bankruptcy judge allows appeal, asks higher court to reject

Fri Dec 20, 2013 5:35pm EST

By Joseph Lichterman

DETROIT Dec 20 (Reuters) - The judge in Detroit's bankruptcy case on Friday certified a direct appeal of his recent decision declaring the city eligible for bankruptcy protection, but recommended that a federal appellate court reject it because the case would best be dealt with in bankruptcy court.

Judge Steven Rhodes, of U.S. Bankruptcy Court, in a written decision said he is required to certify the appeal directly to the U.S. 6th Circuit, a move that bypasses an intermediary step of an appeal to U.S. District Court.

Still, he recommended that the higher court reject the appeal and allow his court to embark on the process of resolving the city's financial insolvency without the interruptions a simultaneous appeal would impose.

On Monday, Rhodes said from the bench that he would allow for the appeal to bypass the district court, but he delayed a ruling on whether he would ask the higher court to expedite the appeal.

In his written ruling, Rhodes said he recommended that the appeals court not take up the appeal because it would be best to let the bankruptcy court decide whether to approve the city's plan to adjust its debt quickly and completely without the added burden of an appeals process.

"It is time now to begin that discussion, unfettered by piecemeal appellate litigation," Rhodes wrote.

Rhodes wrote he is still maintaining a March 1 deadline for Detroit to submit its plan of adjustment. Detroit's emergency manager, Kevyn Orr, has said that the city plans to submit its plan in early January.

The judge also wrote that if the court decided to take up the appeal, he would not make a recommendation of whether it should handle the matter in an expedited fashion. Instead, Rhodes wrote that the appeals court should consult with U.S. District Judge Gerald Rosen, the chief mediator in the case, to ensure that an expedited appeals process does not interfere with ongoing mediation.

"The Court remains convinced that the interests of the City, its residents and its creditors are better served by adjusting the pace of the legal process, including the appeals, to meet the needs of the mediation process," Rhodes wrote.

Attorney Sharon Levine, representing the American Federation of State, County and Municipal Employees, said in an interview that the union, which asked for a direct appeal, urges the appeals court to take up the case expeditiously.

"The appeals should be decided quickly and in favor of protecting the pensions and promoting good faith negotiations," Levine said.

Unions, as well as retirees and pension funds, have opposed the bankruptcy, saying that plans to cut pensions for city workers is a violation of the Michigan constitution.

Earlier this month, Rhodes declared that Detroit was eligible for bankruptcy protection due to its insolvency and because there were too many creditors for the city to negotiate with. He also ruled that the city could cut pension benefits to reduce its $18.5 billion in debt, however he said he will "not lightly or casually exercise the power under federal bankruptcy law to impair pensions."

• Link this
• Share this
• Digg this
• Email
• Print
• Reprints

16.47 | 0 komentar | Read More

THAILAND PRESS-Bankruptcies rise for both households, business sector - The Nation

Sun Dec 22, 2013 9:22pm EST

Bankruptcy cases, both personal and commercial, have shown signs of rising due to the economic slowdown this year.

As of October, the Legal Execution Department had 264,232 cases with assets for sale valued at up to 3.47 trillion baht ($106.36 billion). In the last fiscal year ended September, the department succeeded in settling 25,717 cases by mediating between debtors and creditors and selling assets for 33.14 billion baht out of an estimated value of 33.23 billion baht.

NOTE: Reuters has not verified this story and does not vouch for its accuracy. ($1 = 32.6250 Thai baht) (Compiled by Bangkok Newsroom; Editing by Anand Basu)

16.47 | 0 komentar | Read More

Detroit bankruptcy judge allows appeal but asks higher court to reject

DETROIT Fri Dec 20, 2013 4:09pm EST

DETROIT Dec 20 (Reuters) - The judge in the Detroit bankruptcy case on Friday recommended that a federal appellate court refuse to allow a direct appeal of his recent decision declaring the city eligible for bankruptcy protection.

U.S. Judge Steven Rhodes, in a written decision issued four days after he heard arguments over the legal path of the appeal, said he is required to certify the appeal directly to the U.S. 6th Circuit, but that he recommends that the higher court reject it.

16.47 | 0 komentar | Read More

UPDATE 1-RLPC: LightSquared seeks Fortress-sponsored exit loan

Fri Dec 20, 2013 4:32pm EST

By Billy Cheung and Michelle Sierra

NEW YORK Dec 20 (Reuters) - Bankrupt wireless communications firm LightSquared Inc is seeking to raise a $2-2.5 billion senior secured first-lien term loan backing a Fortress Investment Group-sponsored bankruptcy exit plan, sources said Friday.

JP Morgan and Credit Suisse are sounding out investors on the financing that would help Fortress purchase the company out of bankruptcy, sources said. The banks are not committed or contracted to providing or arranging the credit, the same sources noted.

LightSquared declined to comment.

LightSquared had attempted to raise a $3 billion exit loan in June and July through Jefferies but pulled the financing when Dish Chairman Charlie Ergen emerged as the largest creditor for the company. The Jefferies loan would have backed an exit plan sponsored by majority shareholder Harbinger Capital Partners.

Ergen's involvement and a subsequent $2.2 billion July bid by Dish for LightSquared's operating assets, combined with the expiration of the exclusivity period for the company to put forth a restructuring plan, allowed the company's biggest creditor group to push for LightSquared's sale.

The uncertainty around LightSquared's attempt to remain independent helped derail the Harbinger financing, leading to lawsuits filed by LightSquared and Harbinger against Dish, Ergen and related investment affiliates.

As per the Fortress-sponsored exit financing plan, LightSquared is offering a three-year loan with a 12 percent coupon, all payable-in-kind. The loan would be sold at a discount price of between 95 and 97.

The maturity could be extended by a year, subject to a minimum liquidity test. Lenders would receive a 1.5 point fee for agreeing to an extension.

Given that LightSquared's wireless network build out plans remain suspended by the Federal Communications Commission (FCC), lenders have been asked to commit to the deal for six months with a potential three-month extension.

Lenders would be paid a 100bp fee upon confirmation of the Fortress-backed restructuring plan in bankruptcy court. If LightSquared exercises the commitment extension while in bankruptcy, lenders would receive a 50bp fee.

In addition, the loan would be subject to a minimum liquidity covenant during the extension period.

The exit loan would not be callable for the first year and then would have 106 and 103 call protection for the next two years.

The closing of the loan depends on additional equity injected into the company post-bankruptcy and the FCC allowing LightSquared to resume developing its spectrum.

A pre-taped roadshow will be available beginning December 26 with a lender call scheduled for January 6. Fortress and LightSquared would be available to field potential lenders' questions upon request before the lender call.

The company is asking for lender commitments by January 8.

• Link this
• Share this
• Digg this
• Email
• Print
• Reprints

16.47 | 0 komentar | Read More

UPDATE 2-Detroit bankruptcy judge allows appeal, asks higher court to reject

Fri Dec 20, 2013 5:35pm EST

By Joseph Lichterman

DETROIT Dec 20 (Reuters) - The judge in Detroit's bankruptcy case on Friday certified a direct appeal of his recent decision declaring the city eligible for bankruptcy protection, but recommended that a federal appellate court reject it because the case would best be dealt with in bankruptcy court.

Judge Steven Rhodes, of U.S. Bankruptcy Court, in a written decision said he is required to certify the appeal directly to the U.S. 6th Circuit, a move that bypasses an intermediary step of an appeal to U.S. District Court.

Still, he recommended that the higher court reject the appeal and allow his court to embark on the process of resolving the city's financial insolvency without the interruptions a simultaneous appeal would impose.

On Monday, Rhodes said from the bench that he would allow for the appeal to bypass the district court, but he delayed a ruling on whether he would ask the higher court to expedite the appeal.

In his written ruling, Rhodes said he recommended that the appeals court not take up the appeal because it would be best to let the bankruptcy court decide whether to approve the city's plan to adjust its debt quickly and completely without the added burden of an appeals process.

"It is time now to begin that discussion, unfettered by piecemeal appellate litigation," Rhodes wrote.

Rhodes wrote he is still maintaining a March 1 deadline for Detroit to submit its plan of adjustment. Detroit's emergency manager, Kevyn Orr, has said that the city plans to submit its plan in early January.

The judge also wrote that if the court decided to take up the appeal, he would not make a recommendation of whether it should handle the matter in an expedited fashion. Instead, Rhodes wrote that the appeals court should consult with U.S. District Judge Gerald Rosen, the chief mediator in the case, to ensure that an expedited appeals process does not interfere with ongoing mediation.

"The Court remains convinced that the interests of the City, its residents and its creditors are better served by adjusting the pace of the legal process, including the appeals, to meet the needs of the mediation process," Rhodes wrote.

Attorney Sharon Levine, representing the American Federation of State, County and Municipal Employees, said in an interview that the union, which asked for a direct appeal, urges the appeals court to take up the case expeditiously.

"The appeals should be decided quickly and in favor of protecting the pensions and promoting good faith negotiations," Levine said.

Unions, as well as retirees and pension funds, have opposed the bankruptcy, saying that plans to cut pensions for city workers is a violation of the Michigan constitution.

Earlier this month, Rhodes declared that Detroit was eligible for bankruptcy protection due to its insolvency and because there were too many creditors for the city to negotiate with. He also ruled that the city could cut pension benefits to reduce its $18.5 billion in debt, however he said he will "not lightly or casually exercise the power under federal bankruptcy law to impair pensions."

• Link this
• Share this
• Digg this
• Email
• Print
• Reprints

16.47 | 0 komentar | Read More

Detroit might sue swap counterparties -city attorney

DETROIT Wed Dec 18, 2013 2:04pm EST

DETROIT Dec 18 (Reuters) - A lawyer for Detroit said in U.S. Bankruptcy Court on Wednesday that the city might still pursue litigation over its interest-rate swap agreements, even though the city has maintained that the swap counterparties are secured creditors.

Attorney Thomas Cullen of law firm Jones Day made the statement to defend the city's decision to claim attorney-client privilege over internal memos discussing the legality of the swaps. The city used the swaps contracts to hedge interest rate risk on some of the $1.4 billion of pension debt that Detroit sold in 2005 and 2006.

U.S. Bankruptcy Judge Steven Rhodes, who is overseeing Detroit's historic bankruptcy case, pushed the city attorneys for information about the swaps deal. He said the information would be revealed during the litigation process if the city were to sue the swap counterparties.

"How can I decide whether this was a fair settlement without understanding what the city's assessment of the strength of its claims against the swaps and the COPs were?" asked Rhodes. "It's all going to come out."

COPs, or certificates of participation, are related to the city's pension debt.

Earlier in the hearing, Rhodes said "probably the most significant question in this trial" was what arguments Detroit was using to negotiate a termination of the costly interest-rate swaps.

Bond insurers that covered the swaps and payments on the pension debt, holders of the debt, Detroit pension funds and others objecting to the deal have argued it gives an unfair advantage to the counterparties over other creditors.

But the city has defended the move as a way to protect casino tax revenue used as collateral for the swaps, money it views as the Detroit's most reliable source of revenue.

Detroit Emergency Manager Kevyn Orr took the witness stand on Wednesday, the second day of a hearing over whether the court should approve $350 million in post-petition financing. Detroit intends to use a portion of the loan to satisfy a deal with swap counterparties UBS AG and Bank of America Corp's Merrill Lynch Capital Services to end the swap contracts at a lower cost to the city.

"Casino revenue is the single most stable revenue available to the city," Orr said on Wednesday. "Without it, the city could not operate."

And on Monday, the city's lead restructuring adviser, Kenneth Buckfire of Miller Buckfire, said litigation "was not a risk worth taking" because the issue could take years to resolve.

"At that time the city would be dead," Buckfire said in court.

In an Aug. 30 deposition related to the swaps deals, Orr repeatedly dodged questions lobbed by lawyers on whether the city would ever sue the counterparties.

The deal to end the swaps has emerged as a major component in Detroit's July 18 bankruptcy filing.

Wednesday's hearing is occurring as Detroit Mayor-Elect Mike Duggan and Orr have reached an agreement to share power, the Detroit News reported.

• Link this
• Share this
• Digg this
• Email
• Print
• Reprints

16.48 | 0 komentar | Read More

Bankruptcy judge suspends hearing on Detroit's swaps deal

DETROIT Wed Dec 18, 2013 3:39pm EST

DETROIT Dec 18 (Reuters) - The bankruptcy judge overseeing Detroit's bankruptcy case on Wednesday suspended a hearing on a $350 million post-petition financing to end interest-rate swaps, urging the city to renegotiate the deal.

The hearing was scheduled to continue through Thursday, but U.S. Bankruptcy Court Judge Steven Rhodes asked Detroit instead to use the time scheduled for court to hash out details of an agreement.

Rhodes ordered the parties back to court on Friday at 10 a.m. (1500 GMT) to discuss the status of Thursday's negotiations. He said the hearing would be continued at a later date.

16.48 | 0 komentar | Read More

UPDATE 1-Bankruptcy judge suspends hearing on Detroit's swaps deal

Wed Dec 18, 2013 6:03pm EST

By Joseph Lichterman

DETROIT Dec 18 (Reuters) - The judge overseeing Detroit's bankruptcy case on Wednesday suspended a hearing on a $350 million accord to end interest-rate swaps and provide working capital for the city, instead urging the city to renegotiate the deal.

The hearing was scheduled to continue through Thursday, but U.S. Bankruptcy Court Judge Steven Rhodes asked Detroit to use the time scheduled for court instead to seek better terms from the swaps counterparties. The current deal has the city paying 75 percent of what it owes those firms, UBS AG and Bank of America Corp's Merrill Lynch Capital Services.

Rhodes ordered the parties back to court on Friday at 10 a.m. (1500 GMT) to discuss the status of the negotiations. He said the hearing would be continued at a later date.

"I would encourage that as strongly as I can," Rhodes said, regarding the city's efforts to negotiate a better deal.

Thomas Cullen, an attorney at Jones Day who is representing Detroit, said the city would see if "there is a number, a sweetening of the deal, that would make it go away." Though he said he was doubtful it was possible.

The abrupt change to the hearing schedule came about during the testimony of Detroit Emergency Manager Kevyn Orr, who said he would not disclose the contents of internal memos that discussed the legality of the swaps.

The city used the swaps contracts to hedge interest rate risk on some of the $1.4 billion of pension debt that it sold in 2005 and 2006.

Rhodes pushed the city attorneys for information about the swaps deal that Detroit struck with the counterparties prior to the city's July 18 bankruptcy filing. Under the deal, the city would only have to pay about $230 million, which is 75 percent of the cost of terminating the swaps. The judge said the information would be revealed during the litigation process if the city were to sue the swap counterparties.

The current agreement to terminate the swaps at a discount would require Detroit to pay a higher percentage of the original termination fee, 82 percent instead of 75 percent of the original cost, if Detroit cannot close the transaction by Dec. 31.

Spokesmen for UBS and Bank of America declined to comment.

A spokesman for Orr said the city needs court approval for a plan by Dec. 26 and an extention will likely be discussed.

Bond insurers that covered the swaps and payments on the pension debt, holders of the debt, Detroit pension funds and others objecting to the deal have argued it gives an unfair advantage to the counterparties over other creditors.

The city has defended the move as a way to protect casino tax revenue used as collateral for the swaps, money it views as Detroit's most reliable revenue source.

"How can I decide whether this was a fair settlement without understanding what the city's assessment of the strength of its claims against the swaps and the COPs were?" asked Rhodes.

COPs, or certificates of participation, are the type of debt Detroit sold for its public pension funds.

Cullen defended not releasing the information because he said the city still might pursue litigation to nullify the costly agreements.

"One of the reasons we haven't disclosed the memoranda, because we still may sue," Cullen told Rhodes.

Earlier in the hearing, the judge said "probably the most significant question in this trial" was what arguments Detroit was using to negotiate a termination of the interest-rate swaps.

Rhodes said he was not seeking information that was subject to attorney-client privilege.

"My request was that you consider whether maintaining the privilege is in the best interest of the city," Rhodes said. "If you think it is and you think you can prove what you need to prove to get the settlement approved go for it. I think your challenge is more difficult if you keep the privilege."

Included in the approximately 25 documents in question were two draft complaints, Cullen said. He did not name the targets of the complaints.

Gregory Shumaker, another attorney representing Detroit, said the city needed to ensure that the casino revenue was freed in order to stabilize the city, saying, "I don't know how we can right the ship without freeing the casino revenue"

Rhodes replied: "The question is, are you overpaying for that?"

The deal to end the swaps has emerged as a major component in Detroit's Chapter 9 municipal bankruptcy, the largest ever in U.S. history.

• Link this
• Share this
• Digg this
• Email
• Print
• Reprints

16.48 | 0 komentar | Read More

Sentinel trustee wants Bank of NY Mellon to return $337 mln

By Sakthi Prasad

Tue Dec 17, 2013 11:58pm EST

Dec 17 (Reuters) - Bank of New York Mellon should be ordered to return about $337 million to Sentinel Management Group Inc, a U.S. futures broker that went bankrupt in 2007, according to a court filing made by the bankruptcy trustee.

Sentinel's bankruptcy trustee, Frederick Grede, alleged that the futures broker pledged hundreds of millions of dollars in customer assets to secure an overnight loan from Bank of New York Mellon, leaving the bank in a secured position but Sentinel's customers with losses worth millions.

Sentinel largely managed money for other futures brokers, who are required to keep customers' funds in dedicated accounts to protect them from being used for anything other than client business.

However, at Sentinel, customer funds were allegedly moved from the protected accounts to other accounts so that they could be used as collateral for a loan from Bank of New York Mellon.

Sentinel had distributed the money back to the bank in November 2010 in accordance with a U.S. District Court ruling that had put the bank ahead of former customers of Sentinel, who were also seeking to recoup money lost in the futures broker's 2007 collapse.

In August, the U.S. Court of Appeals for the Seventh Circuit in Chicago reversed part of this ruling.

The trustee asked the court to order the bank to return about $312.2 million in principal plus about $24.5 million in interest that was previously distributed. The money would be kept in a reserve account until final resolution of all claims arising out of the bankruptcy.

Despite the appeals court ruling, Bank of New York Mellon refused to return the $337 million to the reserve account, according to the filing made on Monday.

Due to the appeals court ruling, the district court's original judgment has been vacated and there is no longer "a final appealable judgment", the trustee said in the filing.

He has asked the bankruptcy court in Northern District of Illinois to schedule a hearing on Dec. 19.

Since Sentinel's collapse, the futures industry has been rattled by the bankruptcies of two more brokers: MF Global in 2011 and Peregrine Financial Group in 2012. The heads of both firms were alleged to have improperly used customer money.

Bank of New York Mellon could not immediately be reached for comment by Reuters outside of regular U.S. business hours.

The bankruptcy case is Sentinel Management Group Inc, Case No. 07-14987, U.S. Bankruptcy Court, Northern District Of Illinois (Eastern Division).

• Link this
• Share this
• Digg this
• Email
• Print
• Reprints

16.47 | 0 komentar | Read More