A major shareholder pressed Clearwire Corp CLWR.O on Thursday to sell excess wireless spectrum to help bankroll its multi-year network expansion, rather than hand over control to Sprint Nextel (S.N) at a price reflecting its "unnecessary distress."
Mount Kellett Capital Management, which owns 7.3 percent of Clearwire voting stock, issued a statement to Clearwire directors urging the company to consider all options - including a sale of spectrum - to fill an estimated $1 billion funding shortfall as it builds its high-speed wireless network.
The investment firm took issue in particular with Sprint's deal to acquire a majority interest in Clearwire by buying a stake from the company's founder, Craig McCaw, and his investment vehicle Eagle River.
Mount Kellett said the transaction price did not fully reflect Clearwire's full value if it were allowed to finish its network buildout.
"While spectrum values continue to increase, Clearwire faces a liquidity need now that must be met," the private investment firm said in its statement. "How can the Board assure that the Company has adequate financial resources? To us, the answer is obvious: sell excess spectrum."
"The Board should immediately hire an investment bank and task it with running a sales process to sell a substantial portion of the Company's excess spectrum to the highest bidder or bidders."
Mount Kellet added that Sprint should be kept out of any auction, and warned Clearwire's board that it may take further action if the board of directors were to proceed with the Sprint deal. (Reporting by Edwin Chan; Editing by Phil Berlowitz)