US DTH provider Dish Network’s bid to acquire Clearwire was dealt a blow today after the telco accepted a financing instalment from rival suitor Sprint Nextel.
Clearwire said it planned to tap US$80m from Sprint by selling convertible notes, under a…
US DTH provider Dish Network’s bid to acquire Clearwire was dealt a blow today after the telco accepted a financing instalment from rival suitor Sprint Nextel.
Clearwire said it planned to tap US$80m from Sprint by selling convertible notes, under a deal that is part of the latter’s US$2.97 per share offer to take over the company.
It had passed on the first two monthly instalments of this financing in light of a counterbid from Dish, which has offered to pay US$3.30 per share but with a number of conditions attached.
Dish has previously indicated that it would withdraw its offer should the wireless operator draw on any of Sprint’s financing.
However, Clearwire said on 27 February that its special committee plans to continue discussions with Dish as it acts in the best interests of non-Sprint class A stockholders. In a statement the wireless operator said it will draw on the financing option for March, but is yet to decide on whether to tap the financing arrangement for the rest of the 10-month deal.
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 his company needed to utilise vendor financing and the financing pledged by Sprint to meet its operating, financing and capital spending for 2013.
According to an SEC filing, Clearwire will need to draw on US$240m of the total US$800m financing offered by Sprint.
Last December Clearwire agreed to a takeover by Sprint, which owned 50.4% of the stock as of year-end 2012. As part of its bid, Sprint said it 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.
The company’s special committee recommended Sprint’s US$2.2bn bid before Dish announced its rival offer, which Clearwire has been deliberating ever since. Although Dish’s bid is higher, it comes with numerous material uncertainties and conditions attached, some of which would require approval from Sprint because it is Clearwire’s largest 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.
For its part, Dish believes an acquisition of Clearwire will help it realise plans to deploy a nationwide terrestrial 4G network. The company recently received regulatory permission to repurpose its satellite spectrum for the move, but it still requires a terrestrial partner for the build out. Dish chairman Charlie Ergen has been cited saying that, if his Clearwire bid pulls through, Sprint would be the most likely partner for these plans.
Clearwire is advised by Evercore Partners, while Kirkland & Ellis is its counsel. The company’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.
Citigroup is financial advisor to Sprint while Skadden, Arps, Slate, Meagher & Flom and King & Spalding are acting as counsels.
