US WiMax provider Clearwire Communications has announced the pricing for a private placement of up to US$1.1bn.
It said in a statement that it would be offering US$175m in 12% first-priority senior secured notes, due in 2015, for an issue price of…
US WiMax provider Clearwire Communications has announced the pricing for a private placement of up to US$1.1bn.
It said in a statement that it would be offering US$175m in 12% first-priority senior secured notes, due in 2015, for an issue price of 105.182% plus accrued interest from December 1.
It will be offering US$500m in 12% second-priority secured notes, due in 2017, for an issue price of 100% plus accrued interest from December 9.
The final offering will be US$650m of exchangeable notes, due in 2040, at an issue price of 100% plus accrued interest of December 8.
The US$650m figure for exchangeable notes is an increase a previous announcement specifying US$500m in exchangeable notes.
The initial purchasers of the exchangeable notes have the option (for 30 days) to buy an additional US$100m worth of notes.
Clearwire said that certain stockholders holding equity securities amounting to 85% in the company’s voting power would have pre-emptive rights to buy the exchangeable notes.
However, it also said that stockholders with a total of 31% of this stock had waived their pre-emptive right.
This suggests that Sprint Nextel, which owns a 51% stake in the company, may be the only party participating.
Ratings agency Moody’s set a B2 rating on the US$175m first-priority notes, while it assigned a Caa2 rating to the US$500m second-priority notes due in 2017. Both of these ratings fall below the “investment-grade” tier.
By close of trading on Thursday, Clearwire’s shares had fallen by over 13% to US$5.90 on Nasdaq. According to Reuters, this reflected investor concerns about the cost of the debt and worries that Clearwire had failed to raise enough capital to complete the construction of its 4G WiMAX network.
By contrast, Sprint shares rose by 2.4% to US$3.86 on the NYSE, reflecting confidence that Sprint would not (at least for now) need to increase its stake in Clearwire.
Clearwire refused to comment on the terms of the deal. It did say in a statement that it would be using the proceeds for working capital and general corporate purposes, including net expenditure.
The assumption is that Clearwire will be using the proceeds to finance the expansion of its WiMAX network in the US, which has led to it registering increasing losses in recent months.
WiMAX is an alternative 4G technology to LTE, but so far the latter has been the preferred option for US operators. LTE has proved the cheaper service to roll out.
Clearwire reported a net loss of US$139.4m in Q3 2010, compared to a loss of US$82.4mfor the equivalent period last year.
Clearwire announced earlier in November that it would be laying off 15% of its workforce.
Aside from Sprint, Clearwire’s other investors include Bright House Networks, Comcast, Time Warner Cable, Google and Intel.
Separately, Clearwire also announced yesterday that it has nominated three new members for election to its board of directors.
William R. Blessing, Mufit Cinali and Hossein Eslambolchi are expected to be elected at the next board meeting on December 10. All have worked in the telecoms industry.
Clearwire announced earlier this week that it had launched its WiMAX service in several US areas. It will cover 11 million people in the Los Angeles area, as well as 3.8 million people in each of the Miami and Ohio areas.
