TerreStar shareholder files suit alleging change in control of series A preferreds

By Lisa Kerner

Charlotte, N.C., Feb. 9 - Highland Crusader Offshore Partners, LP and three of its affiliates filed suit against TerreStar Corp. in the Court of Chancery of the State of Delaware regarding what Highland believes is a change in control under the series A cumulative convertible preferred stock.

Highland and its affiliates are the sole remaining holders of series A preferreds issued by TerreStar, according to a form 8-K filed with the Securities and Exchange Commission.

The lawsuit contends that some financing transactions entered into by TerreStar in February 2008 with Harbinger Capital Partners Master Fund I, Ltd., Harbinger Capital Partners Special Situations Fund LP, EchoStar Corp. and other investors constituted a change in control of TerreStar under the series A preferreds, the filing said.

According to Highland, the change of control occurred in at least two ways:

• Harbinger acquired control of 58% of TerreStar voting stock; and

• Harbinger and EchoStar constitute a group that together acquired control of more than 50% of TerreStar voting stock.

Highland wants the court to require TerreStar to issue a notice of change of control under the certificate of designation for the series A preferreds and redeem the preferreds for $90 million plus dividends and escrow premiums. Alternatively, Highland seeks unspecified damages, the filing said.

TerreStar believes Highland's claims are without merit and said it will defend against the lawsuit.

Similar claims brought by Highland were dismissed in 2007 and 2008 in two separate courts.

TerreStar, formerly Motient Corp., is a Lincolnshire, Ill., mobile satellite services company.

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