Epic Collapse For Phil Falcone Whose Harbinger Is Forced To Pay 15% Interest On Secured Loan

Tyler Durden's picture

And so the legend of the once invincible "hedge fund titan" Phil Falcone, often the target of mockery and ridicule on the pages of Zero Hedge, ends, after his now irrelevant hedge fund which peaked in the tens of billions back in 2006/2007 is forced to borrow a secured loan from Jefferies at a 15% rate. The reason - the firm's all in gamble in satellite communication company LightSquared, which is also pretty much finished following today's announcement by airline carriers who said that LightSquared would "ruin US aviation." That, and pretty much everything else that Falcone invested in in the past 5 years. Check and mate. This also answers our question from August 2010 "Is Phil Falcone's Mega Bet On [LightSquared] Going To Be His Last?" It is.

From Bloomberg:

Billionaire Phil Falcone’s hedge fund, which tumbled by almost half last year because of a troubled wireless venture, is paying a 15 percent interest rate for a $190 million loan, almost triple what the riskiest corporate borrowers pay, said two people with knowledge of the loan. The loan is backed by all of the fund’s assets, according to the people. In addition to LightSquared, they include a 27 percent stake in Ferrous Resources Ltd., an iron-ore producer in Brazil, and a 54 percent stake in Spectrum Brands Holdings Inc., a Madison, Wisconsin-based manufacturer of batteries and pet food. If any assets are sold, Jefferies gets paid first, according to the people, and the lender has the right to help sell some of the assets at an agreed upon minimum price.


Falcone borrowed the money from Jefferies Group Inc. after paying off a $400 million loan from UBS AG on Jan. 30. Falcone received $160 million from New York-based Jefferies after fees, and will pay an annualized rate of 15 percent on the loan, which matures on Oct. 31, according to the people, who asked not to be identified because the fund is private. Interest on the loan will be paid monthly.


The premium Falcone’s hedge fund must pay to borrow money illustrates just how risky lenders view his biggest wager. His main Harbinger Capital Partners Master Fund I has more than 60 percent of its assets invested in LightSquared Inc., a Reston, Virginia-based firm that plans to build out a network offering high-speed data service to as many as 260 million people.


LightSquared is awaiting final clearance from the Federal Communications Commission as regulators weigh test results that show the service’s signals disrupt global-positioning system equipment used by cars, tractors, boats and planes.


LightSquared argues that technical solutions exist to resolve the interference and GPS manufacturers should have planned to accommodate the firm’s use of the spectrum.

Things could always be worse though: Phil could be paying 500%, the same as Greece. For that however, he would have to pledge, most sternly, that LightSquared would be profitable as soon as 2013 though... And of course, Phil still has the missus.

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Ahmeexnal's picture

and FAZ having a major boner afterhours

ilion's picture

Guys at Armada nailed it again on the SP500 and euro today, say euro gonna break 1.33 dollar level tomorrow on the back of probable ECB hocus-pocus: http://bit.ly/zD4RnE Lets see. Tomorrow we gonna have ECB and BoE policy decisions, keep that in mind.

walküre's picture

you call that a boner? let alone a "major" boner? my rooster has a bigger boner than that!

but JEF had a nice run from Nov. lows +50% give or take.

how's that?

drink or die's picture

"LightSquared argues that ... GPS manufacturers should have planned to accommodate the firm’s use of the spectrum."


The engineering equivalent of "it's not MY fault!!!"

Tator's picture

Who else says that all the time???

TruthInSunshine's picture

Greece is on the cusp of a deal with the Eurozone/Germany/ECB for the 117th time in 12 days:

Greece Nears Agreement on Bailout Package 


New York Times‎ - 1 hour ago ... suggested that an agreement in principle was likely among Greek political parties that would keep the country's second bailout package on track.
Ag1761's picture

+1 I came on to this thread to get away all things eastern mediteranean

Oh for fucks sake x 2

Theta_Burn's picture

Sunday night Deadline....to Monday @ 11:00am deadline....to requests for default consequences....to rumors of a deal.....to deny any deal exists....to agreement in principle - after review.....to March 20th.....to....oh for fucks sake

Edit: wasn't this thread about Phil Falcone's fall from grace?



NuckingFuts's picture

Agreed Ag1761.

It's like saying " the sky is blue today"....... everyday. I need no more information about Greece until there are bodies in the streets.

walküre's picture

What is happening to Facebook IPO? the topic has completely disappaered from the orchestrated propaganda news outlets around the world. I guess they realized it was too much hype and cooled it off?

valley chick's picture

isn't Soros invested into LightSquared? 

Archduke's picture

That sucks for LightSquared. The Gauntlet of cronyism and protectionism has snuffed

real capital innovation.  Way to go.  Instead of industrial progress we get Facebook.

Dreadker's picture

I have to say, LightSquared would have seriously damaged other carriers.... unlimited nationwide access to high speed celular/sat data...


But it does mess with GPS... if only from the fact that they blocked off massive areas in texas and california/nevada to do their testing lol 

blunderdog's picture

Latency on satellite connections SUCKS.  This could've been a huge boon to millions of rural Americans, but satellite ISPs still can't replace fiber/cable/copper to the house.

Caviar Emptor's picture

There's a long, sordid history of failed satellite companies, each one of them turned into a scam: Iridium, Globalstar...they only succeeded in making phones for Mujahadin

NotApplicable's picture

I've been off of HughesNet for two years now, and I still want to get in the CEO's face and scream at him about how horrible their service (and customer service) is.

I'd go back to dialup before I'd deal with those worthless f*cks again.

NuckingFuts's picture

Living way out there as I do my only choices are Hughes Net and WildBlue. I hear you....... Still beats having neighbors though. The reason I don't mention which I chose has something to do with a CEO I still have in the basement.

Nobody For President's picture

Ahmen to that - Hughes was OK for several years, then got bought by some fucks that added customers without adding any bandwidth - four minutes of watching movie trailers made you a bad boy ("You have exceeded our Fair Use Policy...") and you were put on a slower-than-dial-up speed for hours. Hours! Not so good for trading...cost me more than once. Finally got enough build out locally of a radio-net off of a T Line 10 miles away, works really well and have 'close-to' city speed. Hulu movies work, though most evenings find me here on zh - fucking place is ruining my recreation (or turning into it).


But as a pilot, I hope Falcone goes broke real fucking soon. The whole LightSquared bullshit should never have got as far as it did - it is on THEM to not interfere with the existing, built-out system that pilots and fishermen put their life on. This is really non-trivial, to even potentially screw with GPS signals. All the aircraft alphabet groups - private, commercial, business, and rec pilots came out flaming on this on, as did the fisherman, especially the coastal/off shore folks, and a number of gubbermint land agencies. The Military was also not amused...LightSquared spent way too much time blaming and fighting the system instead of getting their god damned act together. They deserve to go down in flames - we rural folk are figuring out how to get hi-speed data access without them.

bob_dabolina's picture

He can use Wilbur for collateral. Who doesn't like a piano playing pig?

Stevie Cohen can have Hirst embalm it in formaldehyde or something classy.

yabyum's picture

15%!!!! Jesus I can better points from a Cuban leg breaker.

HungrySeagull's picture

Jesus nothing.

15% EITHER a car loan in the 80's (Dealers almost starved when the run on BMW's was choked off by the Fed)

or none at all.

catacl1sm's picture

Should have just gotten a credit card, would have been cheaper.

Haddock's picture

What's the difference - he's all in with nothing to loose except the money other people have given him. Only his ego suffers.

Caviar Emptor's picture

Yes. He'll have plenty of time to feel bad on his yacht

Haddock's picture

Boo Fuckin Hoo.

On a side note, what kind of idiot would lend, even at 15% - probably sOmeone lending someone else's mOney...

hedgeless_horseman's picture



Lightsquared is not the worst decision Phil has made in his life.

Those shoes made for walking, Lisa?

Global Hunter's picture

what the hell is that a picture of?

Answer to my own question. a little boy with tits

azusgm's picture

The designer should go to prison over that atrocity. The dress must have been inspired by the person wearing it.


Nobody For President's picture

I am reminded of Doonsbury's 'anorexic chickee' that Mark's father Phil - the archetype rich wall streeter - married.

jcaz's picture

Hehehe-  she runs WAY more than 15 points.....

tekhneek's picture

I wonder what his name was before he changed it to Lisa?

bob_dabolina's picture

...his name was Robert Paulson

Smiddywesson's picture

LOL yeah, does she get to keep the $45 million townhouse when the big split happens?

Look on the bright side Lisa, people will now accept you as a serious business person now that your husband is a failure.  What was it you do again?

I remember meeting Soros' trophy wife once.  Man, she was like 35 years old and he had bought her a museum in midtown Manhattan so she could play curator or director of something.   Too funny.

citrine's picture

Do you mean that the person in the picture above is also a trophy wife? I need to check the defintion of a "trophy wife"...

chindit13's picture

You know the new non-competitiveness doctrine?  You get a trophy just for playing.  The trophy can be anything from a Soviet Era "female" Olympic shotputter to Bipasha Basu.  Luck of the draw.

ceilidh_trail's picture

Reminds me of that singing fake fish that flops about on the wall plaque.

delacroix's picture

apparently, it wasn't first place.

giddy's picture

...at least Madoff kept the first wife...  Is that any correlation to jail-time?

citrine's picture

A person must have a really good reason to appear in public looking like that. I wonder, what that reason is...

HedgeCock's picture

Help!!!! My eyes!!!  My eyes!!!!!

Dr. Engali's picture

Why didn't he just take his shitty assets to uncle Ben? I heard he will buy anything. Just tell him how much you need him to print.

Caviar Emptor's picture

Just tell him if he doesn't buy your shit it'll open up the whole Maiden Lane thing

RobotTrader's picture

Hilarous how these hedge fund managers are such avid gamblers.


By putting all their money on one thinly-traded stock, how stupid is that?

You are much better off having a crew of Monster Energy-swilling F12-punching speculative rats gunning the monitors all day scalping specific stocks for swing trades.  And only stocks that trade in decent volume, like the Russell 1000 names.

Big volume moves today in HIG, CSC, coming off the lows on huge volume.

Just like PCX did last week, and X did a month ago, which were "scoffed at" and somebody said I was going to "get destroyed."


HungrySeagull's picture

Wait until the shakes start and those symptoms begin to truly impact the bottom line.

jcaz's picture

Oh I see, Robo- you were buying Netflix for fundamental reasons then.......

You whole on that one yet?

On any?

Even gamblers win now and then- you?