April 3 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.
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
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
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.
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
Clearwire shares closed at $3.28, up 0.9 percent, in trading
on the Nasdaq on Wednesday.