Minority shareholder Mount Kellett wants US WiMax enterprise Clearwire to sell excess spectrum to improve its capital profile.
The investor also called on majority shareholder Sprint Nextel to declare its intentions with regards to Clearwire.
In a…
Minority shareholder Mount Kellett wants US WiMax enterprise Clearwire to sell excess spectrum to improve its capital profile.
The investor also called on majority shareholder Sprint Nextel to declare its intentions with regards to Clearwire.
In a letter to the company Mount Kellet, which owns a 7.3% stake, claimed that Clearwire has a funding gap of over US$1bn and only has enough cash to fund its network build out program for another year.
The firm also noted that a standstill agreement stopping Sprint from acquiring 100% of Clearwire without majority board and stockholder approval expires in roughly a year.
The minority shareholder said it is worried that Clearwire is on course to reach a point where the only viable option is to sell to Sprint at a price that will reflect the company’s “unnecessary distress”.
However, the firm argues that situation is avoidable as Clearwire had a considerable amount of excess spectrum which it could sell. It estimated that Clearwire has on average between 60MHz – 80MHz of spare spectrum in its footprint which it could sell for US$6bn – US$8bn; more than the enterprise value of the company.
Selling a substantial portion would also resolve Clearwire’s liquidity problems.
Clearwire’s majority shareholder Sprint has not publicly commented on the letter, but the wireless operator’s CEO Dan Hesse has said recently that it will take any opportunity to buyout Clearwire’s strategic investors if it can get a fair price for their stakes.
Mount Kellett claimed that such proclamations were in breach of the company’s standstill agreement, saying Sprint should either make a tender offer to all the stockholders or declare that it will not continue to amass more stock.
Last month Sprint, which recently agreed to be acquired by Japan’s Softbank, increased its holding from 48.1% to 50.8% after buying founder Craig McCaw’s stake for an amount just shy of US$100m.
The value to Sprint in Clearwire is in its spectrum holdings and the operator is working towards getting unfettered access to them.
The frequencies are also considered to be part of Softbank’s wider plan to put Sprint in competition with AT&T and Verizon Wireless.
Sprint can designate 7 of the 13 Clearwire board seats. However, significant decisions such as changes to c-level management or selling of assets require approval by 10 board members.
