LightSquared Inc., the wireless company backed by hedge fund manager Philip Falcone, said on Tuesday it plans to lay off nearly half of its employees to save money.
LightSquared (Reston, Va., USA) said it will cut 45% of its 330-employee workforce and called the planned move a "prudent and necessary cost savings measure to ensure the long-term success of the company."
On Monday, LightSquared failed to pay $56 million it owed to a British satellite partner Inmarsat.
A week ago the U.S. Federal Communications Commission dealt the company a severe blow when it said it would revoke permission for LightSquared to move ahead with its wireless network, after tests found that it would interfere with Global Positioning Systems used by airliners and the military.
As speculation has mounted that the company might soon be forced to file for bankruptcy, Falcone has steadfastly ruled that out. One person familiar with the situation said on Tuesday that the company is not considering bankruptcy.
"The company remains committed to managing its core business operations, serving the more than 300,000 government, public safety and commercial users of its satellite service," LightSquared said in a statement.
Last year LightSquared scrambled to make permanent the government's provisional approval to build the network. It spent $2.5 million on lobbyists in 2011, nearly 10 times the $265,000 it spent in 2010.
It employed 15 lobbying firms last year, according to OpenSecrets.org which tracks lobbying activities.
Denver-based Brownstein Hyatt, which has offices across the western part of the United States where LightSquared's new network might be especially welcome, was paid the single largest amount of $310,000. Washington DC firm Patton Boggs collected $300,000.
LightSquared would not comment specifically on the overall number but said it was forced to spend more because LightSquared's powerful opponents, namely the Coalition to Save our GPS, were also spending more.
OpenSecrets.org does not break out how much the coalition spent on lobbyists, only what the dozens of members ranging from the Aircraft Electronics Association to West Company of Midland Inc paid individually.
"Everyone is lobbying and the reason our numbers went up is because their numbers went up," LightSquared spokesman Terry Neal said, adding "We have been outspent."
For Falcone, who made his fortune on a bet against subprime mortgages and once oversaw $26 billion, the battle for LightSquared is personal.
He has invested more than 60% of his $4 billion Harbinger Capital Partners' assets in LightSquared and his fund is the biggest equity owner. Last year Harbinger Capital Partners lost 47% of its value after Falcone marked down the value of LightSquared in the portfolio.
(Reporting By Svea Herbst-Bayliss and Sinead Carew; Editing by Matthew Goldstein, Gary Hill and Carol Bishopric)
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