Hedge Fund Harbinger Capital Consummates Skyterra Communications Merger ~ market folly

Thursday, April 1, 2010

Hedge Fund Harbinger Capital Consummates Skyterra Communications Merger

Just a few days ago we touched on how Philip Falcone's hedge fund Harbinger Capital Partners announced plans for a 4G wireless network as spectrum is apparently the hottest new asset class out there. They are doing so via their stakes in TerreStar (TSTR) and Skyterra Communications (SKYT) and yesterday after the market close we see that they filed an amended 13D and a Form 4 with the SEC, providing us an update as to what's going on behind the scenes. Simply put, Harbinger acquired 45,147,477 shares of stock and paid $5.00 in cash per share for each totaling $225,737,385. Upon the completion of this transaction, the stock was canceled and ceased to exist (i.e. merger complete). As such, the company is now privately held with no public market for stock.

Before we dive into the legal jargon, we'll just preface this in layman's terms by saying that all you really need to know is that the merger between SKYT and Harbinger was consummated. On March 29th, Harbinger acquired 23,042,077 shares of voting common stock at $5 per share and 22,105,400 non-voting shares at the same price. This transaction was part of Harbinger's acquisition of Skyterra through a merger and all shares of common stock not previously held by Falcone's hedge fund firm were "converted into a right to receive $5.00 in cash, subsequently canceled and ceased to exist." Additionally, all warrants were canceled and ceased to exist as well. So, this appears to be one of the first major steps towards their play on spectrum and make sure you head to their plans for a 4G wireless network.

Other recent activity out of hedge fund Harbinger includes selling some New York Times (NYT) shares and you can view the rest of Falcone's equity portfolio here.

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