Another major MetroPCS shareholder criticizes T-Mobile USA deal

NEW YORK Fri Feb 15, 2013 10:46am EST

NEW YORK Feb 15 (Reuters) - Paulson & Co, a top shareholder in MetroPCS Communications Inc, became the second big investor in a week to criticize the wireless service provider's plan to merge with T-Mobile USA, potentially signaling trouble for the deal.

MetroPCS agreed to merge with Deutsche Telekom AG's T-Mobile USA in October, in a reverse merger deal that would give Deutsche Telekom a 74 percent stake in the combined company. Under the deal, MetroPCS will declare a 1-for-2 reverse stock split and pay $1.5 billion to its shareholders.

Paulson, which owns 8.7 percent of MetroPCS shares, said in an e-mail on Friday however that "it may be more prudent for PCS to remain independent and explore other higher value alternatives."

While Paulson said the firm had yet to make a final decision on how it would vote, it complained that the combined company would have too much debt and the exchange ratio is too low for MetroPCS shareholders, echoing criticism from another shareholder, P. Schoenfeld Asset Management LP (PSAM).

P. Schoenfeld Asset Management, a holder of about 2 percent of MetroPCS shares, said in letter to MetroPCS on Feb. 7 that it intends to vote against the merger.

"We are awaiting the final merger proxy before we make a decision on our vote but think that P. Schoenfeld Asset Management's arguments make a lot of sense," Paulson said in an e-mailed statement.

MetroPCS shares were up 16 cents or 1.6 percent at $10.40 on the New York Stock Exchange on Friday morning. The stock has risen about 7 percent since the Schoenfeld letter. (Reporting By Sinead Carew; Editing by Nick Zieminski)