Satellite communications group Inmarsat has reached a settlement with its US partner, Lightsquared, over the money the US wireless network company owes the FTSE 250 firm.
The two parties have renegotiated their co-operation agreement to take into account LightSquared's cash flow difficulties.
LightSquared has made a payment to Inmarsat of $56.25m, being the overdue completion payment for the Phase 1 transition part of their previous agreement.
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Inmarsat has agreed to suspend Phase 2 of the co-ooperation Agreement until March 31st, 2014, and with it the obligation to make Phase 2 payments, including the formerly overdue payment of $29.6m which became due at the end of March.
On April 1st, 2014, or earlier if LightSquared so wishes, Phase 2 payments will recommence from that date based on a restructured payment plan that will differ from the previous Phase 2 payments and be dependent on certain future outcomes with regard to deployment of the LightSquared network. A payment due on April 4th, 2012, in relation to Phase 1.5 of the co-ooperation Agreement has been renegotiated within the scope of the amended terms for Phase 2.
As a result of the new agreement, notices of payment default issued by Inmarsat to LightSquared will no longer have any effect, the statement from Inmarsat said.
The revised agreement gives LightSquared a bit of breathing space which it will use to try to secure regulatory consents for the deployment of its Ancillary Terrestrial Component network in North America.
"The deployment of the LightSquared network remains a substantive revenue opportunity for Inmarsat, through Phase 2 of the co-operation agreement, and Inmarsat believes this amendment is in the best interests of Inmarsat's shareholders,2 the statement concluded.
Inmarsat's shares were launched higher by the news, rising just over 25p to 447p.
JH
