While Clearwire has decided to accept further US$80m financing from Sprint Nextel, a Clearwire investor has sued the company, alleging the parties breached their fiduciary duties in reaching the US$2.97 takeover deal agreed in December.
Aurelius Capital…
While Clearwire has decided to accept further US$80m financing from Sprint Nextel, a Clearwire investor has sued the company, alleging the parties breached their fiduciary duties in reaching the US$2.97 takeover deal agreed in December.
Aurelius Capital accuses Clearwire of not acting in the best interest of minority shareholders and alleged the agreement had been “orchestrated through unfair dealing”.
The hedge fund, which holds 17 million shares in Clearwire, previously offered the wireless provider financing as an alternative to funding pledged by Sprint.
As part of its merger proposal Sprint offered Clearwire US$80m of financing per month for 10 months in the form of convertible notes.
Due to a rival offer from Dish Network Clearwire did not draw on the financing in January or February, but chose to in March and April. Clearwire’s board has now said it will take the financing in May as well, meaning it will have drawn US$240m. It can take a further US$400m under the agreement.
Aurelius and fellow minority shareholder Crest Financial offered Clearwire financing at discounts to Sprint’s terms, but under the terms of its merger agreement Sprint blocked the proposals.
Aurelius is not happy with the terms of the financing and said they were coercive to force minority shareholders to vote in favour of Clearwire’ offer.
“Sprint has forced minority shareholders between Scylla and Charybdis: either accept Sprint’s unreasonable terms or face significant dilution of their shares,” the hedge fund said in its court filing.
Following the news Clearwire shares rose by 3.9%.