April 11 (Bloomberg) — Billionaire investor Carl Icahn is nearing agreement to buy a stake in a closely held Brazilian iron ore mining company from Phil Falcone’s Harbinger Capital Partners LLC, according to four people familiar with the talks.
Icahn is seeking to buy 14.9 per cent in Ferrous Resources Ltd., three of the people said, declining to be identified as the discussions are confidential. He intends to pay $1.50 a share, partly in cash, one of the people said.
Harbinger has been looking for a buyer for part of its 26 per cent Ferrous stake since at least February to raise cash to pay down a loan from Jefferies Group Inc. Harbinger lost 47 per cent for investors in its main fund last year as Falcone was forced to cut the value of his $3 billion investment in broadband wireless venture LightSquared Inc. by more than half.
Icahn is also pursuing a position on the board of Belo Horizonte, Brazil-based Ferrous, three of the people said.
Lew Phelps, a spokesman for New York-based Harbinger, declined to comment. The Harbinger Capital Master Fund, which holds a 19.5 per cent stake in Ferrous, valued it at $3.13 a share, or $486 million, documents that describe the Jan. 30 loan from Jefferies show.
Ferrous has been trying to find a strategic partner to help finance its Brazilian projects since at least 2009, having shelved plans in June 2010 for a $400 million initial public offering in London because of fluctuating equity markets.
Icahn, along with investors David Tepper and Andrew Beal, bought $300 million of LightSquared debt sold by Farallon Capital Management LLC in December. The move may help give Icahn control of Reston, Virginia-based LightSquared’s spectrum for less than what Falcone originally paid.
LightSquared creditors, including Icahn, Tepper and Beal, agreed to give Falcone a waiver not to put the company into technical default after the Federal Communications Commission said it planned to revoke LightSquared’s licence. Falcone has a deadline of April 30 to revisit that waiver with his bondholders.
–With assistance from Katherine Burton in New York and Matthew Campbell in London. Editors: John Viljoen, Dale Crofts
To contact the reporters on this story: Jesse Riseborough in London at [email protected]; Saijel Kishan in New York at [email protected]; Juan Pablo Spinetto in Rio de Janeiro at [email protected]
To contact the editor responsible for this story: John Viljoen at [email protected]