Wireless network operator Clearwire Corp. (CLWR) said Thursday it has elected to tap $80 million in financing from its majority shareholder Sprint Nextel Corp. (S), which has offered to buy the company's remaining stock that it does not already own in a deal valued at $2.2 billion.Clearwire has also received another takeover bid from satellite TV provider Dish Network Corp. (DISH) that trumps the Sprint offer.
Clearwire said it has elected to take the $80 million draw for the month of April under the terms of its merger deal with Sprint, which will provide it with additional financing in the form of exchangeable notes.
Sprint said in December that it agreed to buy the remaining 49.2 percent stake in Clearwire that it does not already own for $2.97 per share in a deal valued at $2.2 billion. Sprint already owns a 50.8 percent stake in Clearwire.
Sprint also said it will provide up to $800 million of additional financing to Clearwire as exchangeable notes that will be exchangeable under certain conditions for Clearwire common stock at $1.50 per share. The interim funding will allow Clearwire to continue its LTE build-out and complement Sprint's LTE deployment.
Under the financing agreements, Sprint agreed to purchase $80 million of exchangeable notes per month for up to ten months beginning in January 2013, with some of the monthly purchases dependent on certain funding conditions.
This is the second time that Clearwire has utilized the funding from Sprint, having earlier tapped the funds in March. The company did not utilize the funding in January and February as it was still considering another buyout offer from Dish Network.
The special committee of Clearwire's board of directors has not determined whether to take any future draws under the Sprint financing agreements and has also not determined whether to change its recommendation of the current Sprint transaction. The company continues to recommend the Sprint deal.
In early January, Clearwire said it received an unsolicited offer from Dish Network to acquire all of its common stock for $3.30 per share, trumping Sprint's offer by 11 percent.
Clearwire said over the course of the last three months, the special committee of its board has engaged in talks with Dish as well as Sprint on their bids, and intends to continue such talks. The Special Committee will pursue the course of action that it believes is in the best interests of Clearwire's non-Sprint Class A stockholders.
CLWR closed Thursday's trading at $3.24, down $0.01 or 0.31 percent on a volume of 4.33 million shares.
by RTT Staff Writer
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