LightSquared creditors have had their fill of Phil

It’s showtime for hedge fund honcho Phil Falcone.

The wealthy backer of LightSquared, the 4G wireless start-up, is staring at a 10 a.m. Monday morning deadline to step down from the company and greatly reduce his ownership stake or risk losing his entire $2.9 billion investment by having creditors force it into bankruptcy.

Creditors, including Carl Icahn, feel Falcone has become too toxic a presence atop LightSquared and that the company can succeed only if the 49-year-old chairman of Harbinger Capital Management makes himself scarce.

Falcone, earlier this year, rankled a Capitol Hill lawmaker with his actions and has been unable to smooth over a hostile relationship with several groups, including the Defense Dept., which are upset that LightSquared’s 4G network interferes with their GPS systems.

Creditors have deemed Falcone a “political lightning rod.”

Icahn and other owners of LightSquared’s $1.6 billion loan due 2014 set the April 30 deadline to decide whether to declare LightSquared in default for breaching loan covenants tied to its customer contracts.

In February, LightSquared’s primary regulator, the Federal Communications Commission, said it planned to pull the plug on the company’s ambitious roll-out scheme because of the GPS snafu.

Creditors also want to replace LightSquared’s board of directors and the previous management team, sources told The Post.

In addition, creditors also want Falcone, who owns 96 percent of the venture’s equity through his Harbinger hedge fund, to give up financial control of LightSquared, sources told The Post.

Under this scenario, Falcone would retain some kind of financial interest, but much reduced from his current stake, a person close to the negotiations told The Post.

“What stake he retains is subject to debate,” this person said.

A person close to Harbinger said the hedge fund has not yet seen an economic proposal from the creditors. Also, people close to Falcone say they doubt Icahn will get better results from DC.

Regardless, the deadline is fast approaching. If a deal is not struck before Monday morning, creditors could declare default and force a bankruptcy — assuming Falcone doesn’t get there first.

The hedge fund manager has threatened to place the company into voluntary bankruptcy to protect the troubled wireless venture from creditors seeking a “quick flip.”

Falcone, who has invested $2.9 billion in LightSquared, had been aiming to launch coast-to-coast 4G wireless service for as many as 260 million Americans.

kwhitehouse@nypost.com

Carl Icahn, LightSquared, Harbinger Capital Management, Falcone, hedge fund, ownership stake, Federal Communications Commission, creditors, 4G wireless

Nypost.com