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NEW YORK, March 7 (Reuters) - Wireless broadband network company Clearwire Corp., founded by cell phone sector pioneer Craig McCaw, raised $600 million with an increased initial public offering on Wednesday that was priced at the top of a forecast range.
Despite investor unease since last week’s big stock-market sell-off, demand for the first major IPO since then was hot, due in large part to McCaw’s involvement, said Scott Sweet, managing director for IPO research firm IPOboutique.com.
McCaw previously served as chairman and CEO of McCaw Cellular Communications Inc., which he sold to AT&T Corp. in 1997 for $11.4 billion.
“McCaw has a track record and has the benefit of being both exceptionally tech savvy and fiscally adept at running companies that require a lot of start-up funding,” Sweet said. “People are betting on Craig McCaw.”
The 24 million shares of Class A stock, which was increased from 20 million shares, sold for $25 per share compared with a $23 to $25 forecast, according to an underwriter.
Based in Kirkland, Washington, the company will have two classes of stock. Each share of Class B is convertible to one Class A share, but will have 10 times the voting rights as a Class A share, according to an amended offering document filed with the U.S. Securities and Exchange Commission.
The offering price gives the company an initial market capitalization of more than $3.9 billion.
McCaw, who is chairman and co-chief executive, is the largest shareholder with 65.4 percent of the company’s Class B stock and he will have 24.8 percent of the Class A stock after the IPO.
Clearwire builds and operates wireless broadband networks with WiMAX, a next-generation technology that offers the data-transfer speed of a broadband connection without a hard-line.
The company offers its service in a limited number of areas in the United States. However, the company bought the rights to 2.5 GHz spectrum from AT&T T.N for $300 million in February in an effort to expand its reach.
McCaw founded Clearwire in October 2003, and the company entered its first market in August 2004. As of Dec. 31, Clearwire offered services in 34 U.S. markets, Belgium and Ireland.
The company plans to use net proceeds from the offering for market and network expansion, spectrum acquisitions and general corporate purposes, according to the SEC filing.
The company lost money in 2006, according to year-end financial statements listed in IPO documents, and WiMAX technology still lacks broad consumer acceptance.
The company also faces potential competition from Sprint Nextel Corp. S.N, which is investing $3 billion in its own WiMAX network in 2007 and 2008.
Intel and Motorola are expected to broaden WiMAX uses to mobile phones and other portable devices.
Intel will hold 26.4 percent of Clearwire's Class A stock and 34.6 percent of its Class B shares after the offering. Motorola will have 12.9 percent of Class A stock after the offering while Bell Canada BI.TO will hold 10 percent, according to the SEC filing.
“The investment by Motorola and Intel was a broad endorsement of the company,” Sweet said.
Merrill Lynch & Co., Morgan Stanley and JPMorgan led a group of 10 underwriters, which will have the option to buy another 3.6 million shares of Class A stock to cover over-allotments, according to an underwriter.
The company intends to list on the Nasdaq under the symbol "CLWR" CLWR.O.
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