Clearwire Corporation has been offered $80m in financing from hedge fund Aurelius Capital as an alternative to funding from Sprint Nextel, which is attempting to take over the wireless broadband provider.
The move follows a similar proposition from…
Clearwire Corporation has been offered $80m in financing from hedge fund Aurelius Capital as an alternative to funding from Sprint Nextel, which is attempting to take over the wireless broadband provider.
The move follows a similar proposition from activist investor Crest Financial, which last week pledged US$240m in debt financing to Clearwire so it no longer has to draw on funding offered by Sprint. Aurelius said its offer was in addition to Crest’s.
Sprint has offered Clearwire US$80m in financing per month for 10 months as part of its US$2.2bn bid to acquire the remaining 50% of the company that it does not currently own.
Clearwire did not draw on the facility in January or February, but did for March and April. It can draw another US$480m from Sprint. Together Crest and Aurelius have offered US$320m and Aurelius said it believed others would come in to provide a further US$160m to match Sprint’s proposition.
Financing from Sprint, Crest and Aurelius all comes in the form of convertible notes. Aurelius said its notes would be convertible at US$2 per share, the same as Crest’s offer, which represents a premium of 33.3% on Sprint’s US$1.50 per share exchange ratio.
Crest, which last disclosed that it owned 8.34% of Clearwire’s outstanding stock, said that its offer of financing would give Clearwire time to examine alternatives to Sprint’s offer, which it described as “inadequate”.
In a public letter to Clearwire, Aurelius said its financing would give it an absolute return of 48.5% based upon Sprint’s US$2.97 per share offer for the rest of the wireless broadband provider’s stock, and 65% on Dish Network’s rival US$3.30 bid made in January.
In a statement Clearwire said: “We have received the proposal from Aurelius Capital Management. Our Special Committee of the Board will evaluate the offer to determine what, if any, action to take.”
