Crest Financial Ltd, the largest minority shareholder in Clearwire Corp, proposed a convertible debt financing plan aimed at making the wireless service provider less dependent on majority owner Sprint Nextel (S.N).
In a letter to Clearwire's board on Wednesday, Crest proposed $240 million of financing through a convertible debt facility that it said would provide Clearwire with enough capital to build out 2,000 new generation network sites as planned and to pay its interest expenses in 2013.
Clearwire, which has taken $160 million in financing from Sprint so far this year, agreed to a takeover by Sprint in December. However, shareholders including Crest have said they were unhappy with Sprint's deal price, which requires approval from the majority of its minority shareholders.
Clearwire spokesman Mike DiGioia said the company received the Crest proposal and its "Special Committee of the Board will evaluate the offer to determine what, if any, action to take."
Representatives of Sprint were not immediately available to comment.
Crest, which is aiming to block Sprint's effort to buy the rest of Clearwire, said it would provide the debt financing through a note purchase agreement with the notes issued at a 1 percent annual interest rate.
The proposed financing would also provide Clearwire's board with more time to consider alternatives to Sprint's offer to buy the roughly 49 percent of Clearwire it does not own, Crest said.
Clearwire said last week that it would draw on $80 million in financing from Sprint, which offered $2.97 per share for Clearwire.
Sprint's December proposal to buy out Clearwire included the option for the smaller company to draw on $800 million in convertible debt in 10 monthly installments.
Clearwire did not tap the financing until March as it said it was still reviewing a counteroffer of $3.30 per share from satellite TV provider Dish Network Corp (DISH.O).
When Clearwire finally drew on the money, it said it would keep talking to Dish.
The financing is in the form of debt that will be convertible to Clearwire shares in the event that its shareholders vote against Sprint's offer.
So every installment that Clearwire accepts would further weaken its minority shareholders' clout in the future.
But many Clearwire shareholders, including Crest Financial, have said they were unhappy with the Sprint offer, which would need approval from the majority of Clearwire's minority investors.
Clearwire shares closed at $3.28, up 0.9 percent, in trading on the Nasdaq on Wednesday.