LONDON (Alliance News) - Inmarsat PLC said Friday that further payments from its cooperation agreement with its US partner LightSquared are subject to "significant uncertainty" because LightSquared filed for reorganisation May 2012, after LightSquared decided to restart Phase 2 of its cooperation agreement with Inmarsat Monday.
Under Phase 2 of the cooperation agreement between the two companies Inmarsat will support a wireless radio spectrum plan to increase the total capacity it has available to LightSquared.
The Phase 2 stage had previously been suspended since April 20, 2012. However, LightSquared opted to restart Phase 2 of its cooperation agreement with Inmarsat Monday, resulting in a USD5 million payment which was received Thursday.
Phase 2 quarterly payments from LightSquared will become due within 30 days of June 1, Inmarsat said. Following this, Phase 2 payments will fall on the March 31, June 30, September 30 and December 31 of each year, and will be USD12.5 million per quarter. They will increase at a rate of 3% yearly, with an additional USD5 million per quarter due for the first 10 quarters.
LightSquared has chosen the Phase 2 option with the lowest associated payments, Inmarsat said.
However, the company cautioned that there was no guarantee that any further payments will be received from Lightsquared, as the company has not yet completed a reorganisation process that would allow to fund further payments.
Shares in Inmarsat were trading down 0.3% at 741.50 Friday afternoon.
By Hana Stewart-Smith; hanassmith@alliancenews.com; @HanaSSAllNews
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