Motient Corp. scored a solid win against Highland Capital Management L.P. and its president, James Dondero, with news that Motient stockholders voted to elect all of the company’s six nominees to the board of directors at its annual stockholder’s meeting.
“Today’s vote is a clear demonstration of investor support for the strategic direction that management and the board have put forth for the company. We believe that our stockholders have spoken and that they expect Mr. Dondero will put an end to his destructive, meritless and unjustified campaign against the company and its management,” said Christopher Downie, Motient’s chief operating officer, following the July 12 meeting.
Highland, a Dallas-based hedge fund, owns 14 percent of Motient. Dondero, who has accused Motient of gross mismanagement and various improprieties, has been engaged in a proxy fight to get a new, larger slate of directors elected to the company’s board. However, the vote for Motient’s nominees represents a huge setback for Highland.
In May, Motient announced a series of transactions whereby SkyTerra Communications Inc. would own 70 percent of Mobile Satellite Ventures L.P., an MSS licensee with Federal Communications Commission approval to combine L-band (1.5 GHz) satellite operations with land-based cellular networks.
Under the plan, Motient would increase to 74 percent its stake in TerreStar Networks Inc., an S-band (2 GHz) MSS licensee also planning to construct and operate a hybrid satellite-terrestrial communications system capable of providing services to small wireless phones.
The ownership realignment requires federal approval.
Motient currently owns a 49-percent stake in MSV and a 61-percent stake in TerreStar.
Motient recently sold its legacy terrestrial wireless business to Logo Acquisition Corp.
Earlier this month, Highland lost a lawsuit against Motient in Delaware state court. The court rejected the hedge fund’s demand for access to Motient’s books and records. It was the second time this year Highland has lost a lawsuit in that court. Elsewhere Highland and Motient have suits pending against each other.
Following last Wednesday’s annual meeting, Niles K. Chura, portfolio manager at Highland and one of Highland’s eight nominees for Motient’s board, stated: “We are clearly disappointed, as we believe that our director nominees offered the best choice for the future of Motient and all of its stockholders. No matter the outcome, Highland remains dedicated to good corporate governance and to protecting the value of our investment in Motient. Going forward, we intend to review all our options.”
Meantime, Globalstar Inc., a fully operational global MSS operator, late last month asked the Federal Communications Commission for permission to use more of its spectrum for terrestrial cellular operations. Globalstar presently is allowed to use 11 megahertz, or the remaining amount of its 27.85 megahertz spectrum holdings, for its ancillary terrestrial component.
“Currently Globalstar is the only MSS operator that is not permitted to use its entire spectrum for ATC,” said Jay Monroe, chairman and chief executive officer of Globalstar. “This unequal treatment in the FCC’s rules places us at a disadvantage relative to our competitors and undermines the very goals that the FCC sought to advance when it adopted the ATC rules, which were to encourage the flexible use of the spectrum and provide ubiquitous wireless coverage in the US, especially during times of emergency.”
Globalstar and Iridium Satellite L.L.C., another U.S.-based global MSS operator, played key roles in providing communications in the destructive aftermath of Hurricanes Katrina and Rita last year.
Washington Bureau Chief Jeffrey Silva contributed to this report.
