UPDATE 1-Clearwire investor Aurelius sues Clearwire directors and Sprint
* Aurelius joins chorus that wants better deal for Clearwire
* Calls Sprint's terms for Clearwire "manifestly unfair"
* Clearwire and Sprint decline to comment
* Aurelius says owns 17 mln Clearwire shares
April 26 (Reuters) - Aurelius Capital, a big shareholder in U.S. wireless service provider Clearwire Corp, filed a lawsuit against Clearwire directors and Sprint Nextel Corp over Sprint's December agreement to buy out the portion of Clearwire it does not already own.
Aurelius, which says it owns 17 million Clearwire shares, said Sprint, as Clearwire's majority shareholder, had dictated "manifestly unfair" terms for its Clearwire deal, in a filing at the Court of Chancery of the State of Delaware on Friday.
Aurelius is joining a chorus of Clearwire minority shareholders that are unhappy over the terms of the Sprint deal, which requires approval from a majority of the minority shareholders at a meeting scheduled for May 21.
The hedge fund said that both Sprint and Clearwire's directors violated their fiduciary duties to Clearwire's minority shareholders in reaching the deal under which Sprint would buy Clearwire's minority shares for $2.97 per share.
For example, it said Clearwire should not have had Chairman John Stanton lead negotiations with Sprint because Stanton was originally nominated by Sprint for Clearwire's board.
Clearwire and Sprint declined to comment. Stanton did not immediately respond to a request for comment.
Another big Clearwire shareholder, Crest Financial Ltd, is leading a proxy battle aimed at the blocking the deal.
Aurelius filed its suit two weeks after Clearwire said it rejected an $80 million financing offer from Aurelius because Sprint did not give Clearwire its consent to take the financing.
Clearwire said in a regulatory filing on Friday that it will draw on an $80 million financing available from Sprint for May. ()
Aurelius is known as an uncompromising hedge fund that involves itself in high-profile distressed debt cases. It was a major player in Tribune Co's protracted bankruptcy as lenders and junior creditors fought for four years before the newspaper and broadcasting company emerged from Chapter 11.
The fund has also taken on countries - Aurelius sued Argentina for $1.3 billion in payments on defaulted bonds.
Clearwire shares closed 3.9 percent higher at $3.44 on the Nasdaq on Friday. The stock trades well above Sprint's offer price as investors are betting that the company will attract an improved offer, especially since Dish Network Corp made a counter bid of $3.30 per share in January.