Carl Icahn and David Tepper Are Positioning Themselves To Clean Up If LightSquared Goes Bust

David Tepper Carl Icahn

Hedge funder Phil Falcone’s Lightsquared investment is making headlines again, this time connected to big name investors—Carl Icahn and David Tepper are holding on to the telecommunication company’s debt, the Wall Street Journal just reported, citing sources familiar with the situation.

Yet the names of those two very successful investors may signal actually signal possible grey clouds ahead for the company. 

Icahn is a famed activist shareholder known for picking up debt of companies he believes could be restructured, while Tepper’s Appaloosa Management hedge fund specialises in distressed debt. That means the two may think the company will flop but there is still value in the idea of the venture itself.

The 4G wireless provider has been facing hard times attempting to gain federal approval to sell their service commercially. Tests from the government have shown that the system interferes with GPS devices, but Lightsquared has fought back—announcing just yesterday that the tests done by federal officials were rigged.

Lightsquared has announced they will not be issuing new debt amid reports that the company may run out of money by the middle of this year. If the company goes bankrupt, debt holders like Tepper and Ichan would be able to take control of the company—and either restructure it or sell it, according to the WSJ. 

It’s likely both Tepper and Icahn bought up Lightsquared debt on the cheap last December, when they were selling for 40 cents on dollar as many believed the FCC would not approve the venture.

Tepper and Icahn aren’t the first big names attached to Lightsquared—famed investor George Soros and West Coast hedge fund Farallon Capital Management been connected to the company also.

Read the WSJ story here >

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