Clearwire says needs Sprint funding to last to year-end

NEW YORK Tue Feb 12, 2013 7:08pm EST

NEW YORK (Reuters) - Clearwire Corp CLWR.O, the wireless service provider that both Sprint Nextel (S.N) and Dish Network (DISH.O) want to buy, said on Tuesday that it would need Sprint financing to keep afloat up to the end of the year.

After Clearwire, which is already majority owned by Sprint, agreed to a $2.97 per share bid from Sprint in December, satellite television provider Dish announced a rival offer of $3.30 per share in January. Clearwire has said that it was still reviewing the Dish offer even though its board has not changed its recommendation in favor of the Sprint deal.

Many shareholders have complained that the Sprint offer is not high enough, especially after the Dish news. But Sprint, which needs shareholder approval, has said that it believes its offer was superior because the Dish offer was too conditional.

If Clearwire is to remain fully funded until year-end it said on Tuesday that it would need to draw on as much as $240 million of financing from Sprint and would also need up to $250 million of vendor financing.

FUNDING TO YEAR-END

Clearwire, which has to spend heavily to upgrade its network to high-speed wireless, had previously said it had enough money to fund itself into the third quarter.

The funding forecast means that Clearwire could potentially go a few more months without Sprint's offering if it needs the time to negotiate with Dish, BTIG analyst Walt Piecyk said.

Clearwire had said in December that it risked having to go through a financial restructuring if it did not agree to be sold to Sprint and that there were no alternatives deals at the time.

While some analysts have speculated about whether Dish Chairman Charlie Ergen was serious about Clearwire, Ergen said on Monday that his offer was not "illusory" and that Sprint would have to work to fend off his bid.

Because it was reviewing the Dish bid, Clearwire has had to twice forgo drawing on a monthly financing offer of $80 million from Sprint as part of their agreement because Dish said it would withdraw its offer if Clearwire takes the financing.

Sprint offered Clearwire at total of $800 million convertible notes in installments over a 10-month period so the company could still avail of $640 million in coming months.

Piecyk was frustrated that Clearwire declined to respond to analyst questions about its review of the two offers on its quarterly conference call.

"While that might be normal for transactions, in this case the minority shareholders require more information to make the best decision on the upcoming vote," Piecyk said.

CASH DECREASES BUT LOSS NARROWS

At the end of December its cash, equivalents and investments was $868.6 million, down $315.1 million from the start of the quarter, reflecting a semiannual interest payment and other expenses that cash generated in the quarter.

Clearwire posted a net loss of $187.15 million or 29 cents per share compared with a loss of $236.85 million or 81 cents per share in the year-ago quarter.

Excluding unusual items Clearwire's loss would have been 27 cents per share, in line with Wall Street expectations, according to Thomson Reuters I/B/E/S.

Clearwire revenue fell to $311.2 million from $361.87 million and missed analyst expectations for $313.62 million.

Roe Equity Research analyst Kevin Roe noted that Clearwire's shareholders are far more interested in its ownership status than its numbers. "Their operational results are not what's driving the shares," Roe said.

Shares in Clearwire were basically unchanged after closing at $3.18 on Nasdaq.

(Reporting By Sinead Carew; Editing by M.D. Golan)

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