Ligado Networks has been on the receiving end of many legal claims and actions. Recent lawsuits have come from Inmarsat, for example. But Ligado is now suing the US government alleging the Department of Defense violated Ligado’s L-band spectrum rights and illegally thwarted its 5G programme without compensation.
Ligado has had a troubled history. Ligado emerged from bankruptcy (then called Lightsquared) in 2016, but again is said to be facing liquidation. Its action against the US government is claiming up to $39 billion and arguing that that the DoD (and Commerce Dept.) used a false pretext to deny Ligado’s use of its licensed spectrum.
The FCC granted Ligado L-band spectrum rights in 2020 and approved its terrestrial 5G network plans across the US. Ligado says it has invested billions of dollars into the 4G and satellite program based on the spectrum allocation. Ligado claims the Pentagon has covertly asserted ownership over the allocated L-band spectrum and is using it without compensating the company..
The writ states the action is for “the largest uncompensated taking of private property by our nation’s government in modern times”.
“The DOD misled the FCC, Congress, and many others in its unconstitutional taking of our property and ongoing obstruction of our operations,” said Ligado CEO Doug Smith. “The FCC, the federal agency with exclusive authority over the use and licensing of spectrum, made its final decision in 2020 after a thorough and exhaustive public review process. They stand by that decision today.”
However, the action against the US government might well be the last throw of the dice for Ligado, and well-informed reports suggest that the company is – again – preparing for another entry into bankruptcy.
Not helping matters are debt repayment obligations for Ligado with some $4 billion of borrowings due for repayment – or refinancing – due in November.
Some of Ligado Networks’ existing lenders agreed in July to inject around $22.5 million of new money into the struggling telecommunications company as it faces looming November debt maturities.
The WSJ reported that the $22.5 million fresh financing was a first-lien loan with a higher repayment priority in a potential restructuring scenario, sold at a discounted price of 95 cents on the dollar, said the people, who asked not to be identified because the matter is private. The debt will be allocated in three instalments, including a $7.5 million initial payment and additional funding in August.
Earlier this year, well-known investor Leon Cooperman said that what’s happened with Ligado is “an absolute disgrace” and added: “Ligado owns about 40 megahertz of 5G spectrum–extremely valuable. About 10 years ago, the Department of Defense inappropriately said the spectrum interfered with their needs, and the FCC, which is responsible for setting spectrum policy in the country, spent five years studying the allegations. After five years, they concluded with a 5-0 bipartisan vote that the objections had no merit, and they approved the use of spectrum.”
He continued: “The Department of Defense now changed its story. They said we want the spectrum for national security reasons. I have no problem with that, but they have to pay for it. I’ve spoken to people who are experts in constitutional law, and they say that nothing is impossible, but it would be highly unusual for them to take it in peacetime. The assets are worth about $16 billion to $30 billion depending on who you talk to.”
