* Crest Financial to take fight against Sprint deal to FCC
* Crest to argue Sprint deal bad for U.S. taxpayers
* Kansas court says Sprint must face lawsuit by its
By Tom Hals
Jan 4 A large Clearwire Corp
shareholder said on Friday it plans to ask the U.S. telecoms
regulator to block the sale of the wireless service provider to
its majority owner, Sprint Nextel Corp, stepping up the
investor's campaign against the deal.
Crest Financial's general counsel also said on a call with
reporters that it also plans to ask the U.S. Federal
Communications Commission to block Sprint's plan to sell 70
percent of itself to Softbank Corp of Japan for $20
Going to the FCC is a new line of attack on the Sprint deal
by Crest, which has also filed a class action lawsuit on behalf
of Clearwire investors. Dave Schumacher, Crest's general
counsel, said on Friday the fund said other minority investors
told Crest they did not support the Sprint deal, but he did not
The investment fund, which owns around 8 percent of
Clearwire, has said Sprint's offer of $2.97 share for the
roughly 50 percent of Clearwire it does not currently own,
"grossly undervalues Clearwire." Sprint's offer is worth about
$2.2 billion, but Schumacher said Crest had not done its own
valuation and was basing its criticism of the price on estimates
In going to the FCC, Crest will argue that the Clearwire
deal artificially undervalues the company's spectrum holdings,
Schumacher said. That in turn potentially devalues future
revenue for the U.S. government when it auctions off spectrum
"The merger is therefore a bad deal all around for Clearwire
shareholders and also for the public at large," said Schumacher.
A spokesman for Clearwire, Mike DiGioia, declined to comment
on Crest's intention to go to the FCC. He said a special
committee of the board conducted a rigorous evaluation of the
company's options before agreeing to the Sprint deal.
Clearwire's chief executive, Erik Prusch, has said the
company does not have attractive alternatives as it seeks
funding to continue to upgrade its own network and could risk
bankruptcy if the Sprint deal does not succeed.
Crest has sued Clearwire in the Court of Chancery in
Delaware, where the company is incorporated, to permanently
block the deal.
The Delaware court will hear arguments next week on Crest's
request to expedite the case and Schumacher said Crest hopes to
move to a trial in April.
The deal will need approval by a majority of Clearwire's
minority shareholders and Sprint has said it has the support of
three large Clearwire investors - Comcast Corp, Intel
Corp and Bright House Networks LLC - which hold 13
percent of Clearwire stock. Schumacher said the fund would try
to prevent the three from voting because of their affiliation
As Clearwire's fight with its shareholders heats up, Sprint
has its own shareholders to contend with.
A Kansas court on Friday declined Sprint's request for an
early dismissal of a lawsuit by a union pension fund that holds
The lawsuit alleged that Sprint's chief executive, Daniel
Hesse, rushed merger talks with Softbank and did not get a fair
The ruling by Thomas Sutherland, the judge for the District
Court of Johnson County, Kansas, will allow the pension fund to
begin to demand documents and witnesses as it tries to prove its
Sprint spokesman Scott Sloat did not immediately respond to
a request for comment.