Clearwire to tap Sprint money but continue Dish talks
By Sinead Carew | February 28, 2013 3:21 AM EST
Shares of Clearwire fell 1.5 percent to $3.15 after the decision, which could end Dish Chairman Charlie Ergen's effort to buy the wireless service provider. But the stock was still above Sprint's offer price of $2.97 per share, showing that investors still held out hope for a higher valuation.
Clearwire's latest decision appeared to contradict its previous assertion that it could not take financing from Sprint as long as it was considering a $3.30-per-share offer that came from Dish due to conditions set by the satellite TV provider.
Clearwire's decision appeared to put the ball back in Dish's court. Representatives from Dish and Sprint were not immediately available for comment.
Sprint, already the majority owner of Clearwire, had struck a deal in December to buy out the rest of the company. But many Clearwire shareholders said they were unhappy with the Sprint offer, which would need approval from the majority of Clearwire's minority investors.
While some analysts have questioned the seriousness of Dish's bid, BTIG analyst Walter Piecyk said it would not be a stretch to think that Ergen could modify his proposal to take away the condition after two months of talks with Clearwire.
"We suspect that Ergen is not done with the Clearwire process quite yet," Piecyk said.
Even if Clearwire ultimately rejects Dish, it is not certain that investors will approve the Sprint bid, Piecyk said.
Investors holding 29 percent of Clearwire's minority shares had told Reuters in January that they were not happy with Sprint's bid. Clearwire has yet to set the date for a shareholder meeting to vote on the deal.
Another analyst, Jennifer Fritzsche of Wells Fargo, said Dish could "pursue litigation," given that its bid of $3.30 per share is higher than Sprint's offer.
As part of the December agreement, Sprint had offered Clearwire $800 million in convertible notes that it could draw on in installments of $80 million over 10 months.
Clearwire had declined the $160 million in convertible financing in January and February, saying that it had to do so in order to review the Dish offer.
If Sprint were to convert the $80 million March financing into equity, this would dilute the holdings of today's investors by 3.5 percent.
Clearwire, which said that it has not made any decisions about whether it would accept future installments of the Sprint money, did not explain on Wednesday how it could continue talks with Dish despite the decision to draw on the March financing.
Clearwire said a special board committee "will pursue the course of action that it believes is in the best interests of Clearwire's non-Sprint Class A stockholders."
Clearwire also said it had changed the Sprint agreement to remove a condition that requires it to speed up a wireless network upgrade it is planning in order to draw on the final three months of the financing.
Clearwire does not expect to enter into an accelerated build-out agreement with Sprint at this time, it said.
Along with its Clearwire offer, Sprint is seeking U.S. regulatory approval for an agreement to sell 70 percent of its own shares to Japan's Softbank Corp <9984.T>.
Dish shares were down 0.3 percent at $35.05 in morning trading, while Sprint was up 0.2 percent at $5.79.
(Additional reporting by Sruthi Ramakrishnan in Bangalore, Jennifer Saba and Liana Baker in New York; Editing by Supriya Kurane, Jeffrey Benkoe and Lisa Von Ahn)
Most Popular Slideshows
- Still The World Champions: Team USA Overpowers Serbia, 129-92 To Win 2014 FIBA World Cup [PHOTOS]
- Pope Francis: World War III Has Started On Piecemeal
- After Win Over Maidana, Mayweather Says He Is Prepared To Negotiate A Fight With Pacquiao
- From Fat To Fit: Celebrities Who Were Overweight Before They Became The Beauties That They Are
Join the Conversation
- Tourre on stand says email in SEC case 'not accurate'
- Syrian authorities blocking access to needy in Homs - Red Cross
- Faith in European Union at low ebb, EU poll says
- Former UBS banker gets 18 months, $1 million fine, for muni bid-rigging scheme
- U.S. judge halts challenges to Detroit's bankruptcy bid
- Pregnant Kate Middleton May Call Off Malta Trip Due To Sickness: Royal Couple Will Move To Anmer Hall Residence
- iOS 8 Release Date Of Sept 17 Has Arrived: Update Begins At 10AM Pacific Time, Upgrade Your iDevices With iOS 7.1.2 First To Install iOS 8
- iPhone 6 Plus vs Xiaomi Mi4 – The iPhone Killer Certainly Can Battle Well With The New Apple Phablet
- Ukraine Crisis: Poland Denies Supplying Weapons To Kiev
- Google Nexus 8 Release Date Countdown Begins Oct 8: 8 Killer Specs and Features to Expect
- Malaysia Airlines Flight MF 370: Indonesian Police Chief Claims He Knows What Happened To Missing Jet
- HTC Desire 820 (Octa-Core) vs. Sony Xperia Z3 Compact – Specifications, Features, Release Date And Price Showdown