London-based Inmarsat has a major customer in the shape of US-based Lightsquared. On July 2nd Inmasat confirmed what the market had suspected, that Ligtsquared was missing paying its quarterly bills.
Virginia-based Lightsquared has a long-standing ‘Cooperation Agreement’ with Inmarsat. Lighsquared, founded by hedge fund player Phil Falcone, is developing a 4G-Satellite broadband communications network. It filed for Chapter 11 Bankruptcy Protection in May 2012.
Inmarsat’s relationship with Lightsquared is based on L-band spectrum that increases the amount of spectrum available over the USA. The Inmarsat agreement saw payments of $337 million flow to Inmarsat under Phase 1, and $115 million a year under Phase 2, and which Lightsquared invoked on March 31st 2014.
Inmasat, in a statement, said “On March 31st 2014, LightSquared elected to restart Phase 2 of the Cooperation Agreement. On July 1st 2014, a quarterly Phase 2 payment of approximately $4.1 million and a related payment of $5.0 million became due, resulting in an aggregate amount due from LightSquared of approximately $9.1 million. This payment has not been received.”
“On July 2nd 2014 Inmarsat issued a notice of default to LightSquared under the Cooperation Agreement. This notice triggers a period of 60 calendar days during which LightSquared can remedy the payment before Inmarsat is entitled to enforce its rights and remedies under the agreement for payment default, including pre-agreed spectrum arrangements and termination of certain LightSquared rights under the Cooperation Agreement.”
Inmarsat’s London Stock Exchange price tumbled 44.5p to 706p.