LightSquared Inc. filed for bankruptcy protection this week and also requested the Federal Communications Commission to allow the company to set up the wireless system, which had been restricted.
“LightSquared stands ready to continue to work with federal government stakeholders and the GPS community to find a solution that will placate all affected constituencies,” the statement from the company for bankruptcy filing says, as reported on Bloomberg.com.
The upcoming network of the company was a cause of concern for authorities, as they said that it would cause problem for the working of global positioning system. However, the company assured that the issues would be addressed properly and no problem would occur as a result of their new wireless system.
LightSquared is trying hard to get the approval, but the situation does not seem to be in favor of the company. Analysts feel that it would be very difficult for them to satisfy FCC and therefore the security concerns of the authority are going to stay there.
“So long as there is a GPS interference issue with LightSquared L-band frequencies, the value of the company’s spectrum asset will likely remain diminished,” Jeff Silva, an analyst at Medley Global Advisors research, said, as reported on The Washington Post blog.
The financial position of the company does not allow it to pursue growth opportunities and therefore the management feels that it is appropriate to strengthen their position first. They are looking for the retention of their existing customers and management of their debt. The creditors of the company include global giants, so their satisfaction is very important for them.
The filing for bankruptcy protection is going to provide extra time to the company’s management to sort out the issue of network deployment with the authorities. The filing was therefore being predicted by analysts, so the news should not be very surprising for the company's stakeholders.
Hedge fund manager Philip Falcone also commented on the company’s step of filing for bankruptcy, saying, "Today's filing was not an option the company embraced quickly or easily, but it was necessary to protect LightSquared against creditors who were looking for a quick profit, as opposed to our goal to create long-term market competition," as reported on 10news.com.