Clearwire Corporation will draw on US$80m financing that is part of Sprint Nextel’s US$2.97 per share offer to take over the company.
Clearwire has passed on the first two instalments in the light of a counterbid from Dish Network, which has offered…
Clearwire Corporation will draw on US$80m financing that is part of Sprint Nextel’s US$2.97 per share offer to take over the company.
Clearwire has passed on the first two instalments in the light of a counterbid from Dish Network, which has offered to pay US$3.30 per share but with a number of conditions attached.
In its annual report Clearwire said Dish indicated that it would withdraw its offer should the wireless operator draw on any of the financing.
However, today Clearwire said its special committee plans to continue with the discussions with Dish and will act in the best interests of non-Sprint class A stockholders. In a statement the wireless operator said it would draw on the financing option for March, but is yet to decide on whether to tap the financing arrangement in future.
Clearwire and Sprint have also amended the financing agreement to remove conditions from the final three draws. The future payments had been subject to the two operators agreeing on the accelerated build out of Clearwire’s wireless broadband network. Clearwire said it did not anticipate signing such an agreement with Sprint at this time.
Speaking on a conference call earlier this month Clearwire CFO Hope Cochran said Clearwire needs to utilise vendor financing and the financing pledged by Sprint to meet its operating, financing and capital spending for 2013.
According to an earlier SEC filing Clearwire needs to draw on US$240m of the total US$800m financing offered by Sprint.
In December 2012 Clearwire had agreed to a takeover by Sprint, which owned 50.4% of the stock as of year-end 2012. As part of its bid Sprint would provide the target with US$800m of financing spread over 10 months in the form of convertibles. The notes are exchangeable into Clearwire common stock at $1.50 per share, subject to certain conditions.
Clearwire passed on drawing the financing in January and February, which would have put US$160m onto its balance sheet. It no longer has the option to take those payments.
Clearwire’s special committee recommended Sprint’s US$2.2bn bid before Dish announced its rival offer, which Clearwire has been deliberating since. Although Dish’s bid is higher it comes with numerous material uncertainties and conditions attached, some of which would require approval from Sprint in its role as a Clearwire shareholder.
Either transaction would also require approval from Clearwire shareholders, some of which have criticised Sprint’s US$2.97 per share offer as too low.
Clearwire is advised by Evercore Partners, while Kirkland & Ellis is its counsel.
Clearwire’s special committee is advised by Centerview Partners with Simpson Thacher & Bartlett and Richards, Layton & Finger acting as counsels. Blackstone Advisory Partners advises Clearwire on restructuring matters.
