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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Wed, 02/08/2012 - 17:53 | 2139391 Ahmeexnal
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and FAZ having a major boner afterhours

Wed, 02/08/2012 - 18:44 | 2139590 ilion
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.

Wed, 02/08/2012 - 19:15 | 2139697 walküre
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?

Wed, 02/08/2012 - 17:56 | 2139396 drink or die
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!!!"

Wed, 02/08/2012 - 18:03 | 2139425 Tator
Tator's picture

Who else says that all the time???

Wed, 02/08/2012 - 18:09 | 2139455 TruthInSunshine
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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.
Wed, 02/08/2012 - 18:17 | 2139479 stopcpdotcom
stopcpdotcom's picture

Oh for fucks sake.

Wed, 02/08/2012 - 18:38 | 2139575 Ag1761
Ag1761's picture

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

Oh for fucks sake x 2

Wed, 02/08/2012 - 19:47 | 2139777 Theta_Burn
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?



Wed, 02/08/2012 - 20:17 | 2139891 NuckingFuts
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.

Wed, 02/08/2012 - 18:49 | 2139604 walküre
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?

Wed, 02/08/2012 - 17:57 | 2139409 valley chick
valley chick's picture

isn't Soros invested into LightSquared? 

Thu, 02/09/2012 - 06:22 | 2140916 Archduke
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.

Wed, 02/08/2012 - 18:00 | 2139414 Dreadker
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 

Wed, 02/08/2012 - 18:23 | 2139503 blunderdog
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.

Wed, 02/08/2012 - 18:30 | 2139541 Caviar Emptor
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

Wed, 02/08/2012 - 19:21 | 2139723 NotApplicable
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.

Wed, 02/08/2012 - 20:24 | 2139913 NuckingFuts
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.

Thu, 02/09/2012 - 00:47 | 2140663 Nobody For President
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.

Wed, 02/08/2012 - 18:01 | 2139416 bob_dabolina
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.

Wed, 02/08/2012 - 18:00 | 2139417 yabyum
yabyum's picture

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

Wed, 02/08/2012 - 18:03 | 2139424 HungrySeagull
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.

Wed, 02/08/2012 - 18:03 | 2139431 catacl1sm
catacl1sm's picture

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

Wed, 02/08/2012 - 18:08 | 2139452 Haddock
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.

Wed, 02/08/2012 - 18:32 | 2139552 Caviar Emptor
Caviar Emptor's picture

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

Wed, 02/08/2012 - 18:41 | 2139581 Haddock
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...

Wed, 02/08/2012 - 18:09 | 2139456 hedgeless_horseman
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Lightsquared is not the worst decision Phil has made in his life.

Those shoes made for walking, Lisa?

Wed, 02/08/2012 - 18:15 | 2139467 Global Hunter
Global Hunter's picture

what the hell is that a picture of?

Answer to my own question. a little boy with tits

Wed, 02/08/2012 - 20:38 | 2139957 HungrySeagull
HungrySeagull's picture



Wed, 02/08/2012 - 23:05 | 2140385 azusgm
azusgm's picture

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


Thu, 02/09/2012 - 00:50 | 2140678 Nobody For President
Nobody For President's picture

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

Wed, 02/08/2012 - 18:14 | 2139473 jcaz
jcaz's picture

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

Wed, 02/08/2012 - 18:16 | 2139476 tekhneek
tekhneek's picture

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

Wed, 02/08/2012 - 18:21 | 2139500 bob_dabolina
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...his name was Robert Paulson

Wed, 02/08/2012 - 18:35 | 2139563 Smiddywesson
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.

Wed, 02/08/2012 - 19:45 | 2139786 citrine
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"...

Wed, 02/08/2012 - 22:51 | 2140334 chindit13
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.

Thu, 02/09/2012 - 01:31 | 2140756 ceilidh_trail
ceilidh_trail's picture

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

Thu, 02/09/2012 - 03:38 | 2140901 delacroix
delacroix's picture

apparently, it wasn't first place.

Wed, 02/08/2012 - 18:59 | 2139652 giddy
giddy's picture

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

Wed, 02/08/2012 - 19:40 | 2139766 citrine
citrine's picture

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

Wed, 02/08/2012 - 23:02 | 2140376 HedgeCock
HedgeCock's picture

Help!!!! My eyes!!!  My eyes!!!!!

Wed, 02/08/2012 - 18:16 | 2139475 Dr. Engali
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.

Wed, 02/08/2012 - 18:35 | 2139565 Caviar Emptor
Caviar Emptor's picture

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

Wed, 02/08/2012 - 18:18 | 2139481 RobotTrader
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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."


Wed, 02/08/2012 - 18:55 | 2139630 Rainman
Wed, 02/08/2012 - 20:40 | 2139961 HungrySeagull
HungrySeagull's picture

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

Wed, 02/08/2012 - 21:14 | 2140073 jcaz
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?

Wed, 02/08/2012 - 18:17 | 2139482 Miss Expectations
Miss Expectations's picture

Ugly Bitches!

Wed, 02/08/2012 - 18:20 | 2139489 darkhorse222
darkhorse222's picture

Ellen DeGeneres

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