Update: People involved the hedge fund have confirmed to Clusterstock that it is Americas unit of Old Mutual that Falcone has bought. Bloomberg news reported that name following our initial report.
Original post: Phil Falcone’s mega 4G wireless plan isn’t in the trouble some press reports have led us to believe.
Yesterday, a Reuters story reported Falcone had borrowed $400mn from UBS, using hedge fund assets as collateral, as a critical fund raising move for his ambitious plan to bring wireless services to rural parts of the country. However we’ve learned that’s not the case.
According to a person directly involved in the transaction, the financing was about going from overnight financing to term financing because Harbinger is actually getting ready for a big acquisition in the insurance space.
Falcone, who made $1.5 billion in 2007 betting correctly on the failure of the housing market, has had his eye on various insurance assets for quite some time.
The UBS loan is a way to help finance buying a distressed insurance asset that Falcone thinks he’ll turn around. (The deal isn’t signed yet, so you’ll need to check back for an update).
Regarding the whole fund raising issue for his 4G plan, keep in mind the FCC has already approved the plan and the funding isn’t continent on hedge fund assets at all. In fact a person directly involved in the transaction told us, “We’ve got capital lined up from various sources.”
We asked Falcone just how much more he needs to raise to launch the ‘great wireless services for those others have forgotten plan’ but alas we didn’t get an answer.
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