Clearwire Taps $80M Sprint Financing

But Deal Could Nix Dish Proposal
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Clearwire said Feb. 27 that it has agreed to sell about $80 million in notes to Sprint Nextel, part of an earlier arrangement between the companies that could put a snag in Dish Network’s attempts to acquire the WiMax pioneer.

In a statement, Clearwire said it has elected to take the March draw under the terms of its agreements with Sprint that call for the telecom giant to provide additional funding to the company in the form of exchangeable notes. Those notes will be exchangeable, under certain conditions, for Clearwire common stock at a price of $1.50 per share, or about half its current trading range.

That financing agreement was part of a December deal where Sprint agreed to purchase the remaining 49% of Clearwire stock it did not own for about $2.2 billion. At the time Sprint also agreed to provide up to $800 million in additional financing through the purchase of exchangeable notes. Clearwire has the right to sell $80 million in notes per month for 10 months as part of that deal. In a statement Clearwire said it has not determined whether it would draw further funds as part of that agreement.

While Clearwire gets needed cash from the issuance, it also seems to put the brakes on Dish Network’s unsolicited bid for the company, In January, Dish said it would acquire about 40 Megahertz of Clearwire’s wireless spectrum and up to all of its outstanding shares for about $5 billion.

Dish said in that proposal that it would withdraw its offer if Clearwire drew funds from the Sprint financing agreements.

Dish declined to comment on the latest Clearwire moves but in its Feb. 20 earnings conference call with analysts said that it believes it has proposed a better deal for the WiMax pioneer.

“We think that the Clearwire offer we have is a fair offer and we think strategic to us,” Dish chairman Charlie Ergen said on the Feb. 20 call. “We also think it’s probably good for Sprint and Clearwire, but they may have different opinions. We don’t control that.”  

Clearwire said in the filing that a special committee of its board of directors has engaged in discussions with Dish and with Sprint over the past two months and plans to continue those talks,

“The special committee will pursue the course of action that it believes is in the best interests of Clearwire's non-Sprint Class A stockholders,” Clearwire said in a statement.