NEW YORK/SAN FRANCISCO Clearwire Corp is "actively considering" defaulting on a $255 million interest payment due June 1 on about $4.5 billion of outstanding debt, according to a proxy filing on Friday, as a shareholder vote approaches on Sprint-Nextel Corp's takeover offer.
The company, which urged investors to vote in favor of Sprint's buyout offer, warned that failure to close a deal may force it to contemplate a financial restructuring, which in turn could entail filing for bankruptcy.
The wireless provider also disclosed on Friday it had received an unsolicited bid from an unidentified "strategic buyer" to acquire spectrum leases for $1 billion to $1.5 billion, but provided no further details.
Clearwire has been at the center of a tussle between its majority owner Sprint, satellite provider Dish Network, and unhappy shareholders, ever since Sprint struck a deal in December to buy out the rest of Clearwire.
Sprint offered $2.97 per share, which would need approval from a majority of Clearwire shareholders. In January, Dish trumped Sprint's offer, countering with a bid of $3.30 per share and providing ammunition to investors such as Crest Financial Ltd who argue that Sprint's offer undervalues Clearwire.
"If the merger is not completed, we may be forced to explore all available alternatives, including financial restructuring, which could include seeking protection under the provisions of the United States Bankruptcy Code," Clearwire warned in its filing. "In addition, our board of directors is actively considering whether to not make the June 1, 2013, interest payment on our approximately $4.5 billion of outstanding debt."
A Clearwire spokesman declined to comment beyond the filing.
But the cash-strapped company has shown a willingness in the past to dangle the prospect of a default publicly during negotiations.
IN THE BALANCE
In 2011, Clearwire CEO Erik Prusch said in an interview with the Wall Street Journal that the company was considering skipping an interest-rate payment. Shortly after, its biggest shareholder Sprint, with which it was negotiating a new network-use agreement, struck a deal with Clearwire.
Bellevue, Washington-based Clearwire, which has said it only has funding until year-end with help from Sprint, has been seeking financing to upgrade its network and to support operations.
It owns increasingly valuable spectrum, but lacks the capital to make use of it. Dish, which recently bought spectrum and may be considering a move into wireless services provision, and Sprint consider it one of Clearwire's most valuable assets.
Clearwire has received offers for debt financing from minority shareholder Crest and hedge fund Aurelius Capital Management LP.
But in Friday's proxy filing, the company revealed that Sprint, which has the right to block such offers, would not give its consent for Clearwire to tap either source of financing.
Shares of Clearwire closed down 0.3 percent on Friday at $3.26.
(Reporting by Jennifer Saba and Sinead Carew in New York and Edwin Chanin San Francisco; Editing by Bernard Orr and Paul Simao)