Clearwire holders to get shares in Sprint venture

NEW YORK (Reuters) - Clearwire Corp said on Friday that it would issue its shareholders about $1.62 billion worth of shares in its wireless joint venture with Sprint Nextel Corp in exchange for their existing Clearwire shares.

Five partners, mostly cable companies, have already announced plans to invest a combined $3.2 billion in the venture. They include Comcast Corp, Time Warner Cable, Intel Corp, Google Inc and Bright House.

Clearwire, which expects to close the deal in the fourth quarter, said the $1.62 billion figure was an estimate based on Wednesday's share price.

In a prospectus filed with the U.S. Securities and Exchange Commission on Friday, Clearwire's board, which recommended shareholders vote for deal, said it agreed to pay Sprint a termination fee of $60 million if the deal falls through.

A provider of high-speed wireless Internet service, Clearwire was founded by wireless pioneer Craig McCaw. It uses an emerging high-speed technology known as WiMax, which supports a range of applications including mobile video.

WiMax is expected to blanket entire cities with Web access for mobile devices at speeds up to five times faster than traditional wireless networks, but it is a largely unproven technology.

When it announced its venture with Sprint in May that it would still have to tap debt markets to fill a $2 billion to $2.3 billion funding gap for the project to become cash flow positive.

In June, Clearwire outlined a long-term view of growth for the wireless venture, forecasting revenue of over $17.5 billion by 2017.

Its shares were down 4 cents at $9.83 on Nasdaq.

(Reporting by Christopher Kaufman; Editing by Derek Caney)