Clearwire to Tap Sprint Financing

Sharon Terlep and Joann S. Lublin, The Wall Street Journal

2/27/13

Clearwire Corp. plans to tap financing made available by Sprint Nextel Corp., people familiar with the situation said Tuesday, in a move that further complicates Dish Network Corp.’s effort to buy the wireless broadband operator.

Dish has proposed buying Clearwire for $3.30 a share amid opposition among Clearwire shareholders to a deal in which Sprint would acquire the roughly half of Clearwire it doesn’t own for $2.97 a share.

Shares of Clearwire closed at $3.20, up six cents or 1.9%, in 4 p.m. trading Tuesday on the Nasdaq Stock Market.

Clearwire previously indicated that Dish has said it would withdraw its proposal if Clearwire drew on the funds made available by Sprint. The financing is in the form of notes that convert into stock — an arrangement that gradually could give Sprint a bigger stake in Clearwire.

One of the people familiar with the situation said the draw isn’t intended to dissuade Dish from pursuing the company.

The move is the latest in a three-way standoff between the companies as the wireless industry consolidates. Clearwire, which is struggling financially, needs access to cash and is trying to get the highest price for its long-suffering shareholders.

Sprint meanwhile hopes to gain control of Clearwire’s vast holdings of spectrum to bolster its own service. And Dish, which holds billions of dollars of spectrum but has no cellphone network, is looking for a way into the wireless business.

Sprint executives are expected to inform board members about the exact amount of the draw on Wednesday, according to one person familiar with the matter.

Sprint agreed in December to buy the shares in Clearwire that it didn’t already own. At the time, it also agreed to provide up to $800 million of financing to Clearwire through notes that convert into stock. Clearwire can sell Sprint $80 million of the notes each month for up to 10 months.

Clearwire disclosed Dish’s proposal in early January. Clearwire didn’t draw on the funds in January or February.

Clearwire continued to recommend that shareholders approve the deal with Sprint, while continuing talks with Dish.