Hedge Funds

Harbinger redemptions to be paid in illiquid LightSquared equity

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Investors liken the decision to yet another side-pocketing of redemptions.

Just as investors in Phil Falcone’s flagship Harbinger Capital Partners fund feared, the firm is not paying its first quarter redemption requests entirely in cash. Instead, investors seeking redemptions will receive in-kind payments of the firm’s illiquid holdings in broadband wireless company LightSquared, an investment representing about 80% of the firm’s net asset value.

“In light of my high conviction in LightSquared, its size within our portfolio and the necessity of maintaining a controlling position while we join forces with a strategic partner, we have determined to distribute a portion of the withdrawal proceeds for March 31, 2011