Hedge fund manager Philip Falcone agreed to step aside eventually as the public face of his LightSquared Inc. venture, a concession that may keep the wireless-telecommunications company from defaulting on its debt, people familiar with the negotiations said.
Falcone's compromise is expected to prompt LightSquared's lenders to approve a one-week extension on a debt-term violations waiver that expires Monday morning, the people said.
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If a deal is finalized, Falcone and LightSquared's lenders plan to continue negotiations for a longer extension of somewhere between 18 months and two years, the people said.
LightSquared's board was deliberating Sunday on whether to approve the deal, which would keep the company from filing for bankruptcy protection, at least for now, the people said.
A person close to LightSquared cautioned late Sunday that a final agreement may not be reached, and a bankruptcy filing was still possible.
Falcone has said he viewed bankruptcy as the "best way" for him to keep control of the company and keep it from creditors he believes want to "take control and flip" the firm.
Falcone, the founder of Harbinger Capital Management LLC, launched LightSquared with a daring plan to build a next-generation wireless network using signals previously reserved for satellite use.
His efforts hit a snag earlier this year when federal regulators said they planned to revoke a waiver allowing LightSquared to operate.
The Federal Communications Commission said tests showed the company's network could interfere with GPS signals.
Under the tentative deal with lenders, Falcone wouldn't be allowed to serve as an officer of the company, the people said. The creditors also insist that Falcone eventually step down as a LightSquared director. In time, they want to see LightSquared overseen by an independent board that doesn't include Falcone, the people said.