Clearwire (CLWR) today announced that it has filed a preliminary proxy statement in connection with its definitive agreement with Sprint Nextel Corporation ("Sprint") for Sprint to acquire the approximately 50 percent stake in Clearwire that it does not already own for $2.97 per share (the "Sprint Agreement"). The background section of the proxy statement describes the Company's extensive review of strategic alternatives to maximize stockholder value over the past few years.
As previously disclosed on January 8, 2013, Clearwire received an unsolicited, non-binding proposal (the "DISH Proposal") from DISH Network Corporation ("DISH"). The DISH Proposal provides for DISH to purchase certain spectrum assets from Clearwire, enter into a commercial agreement with Clearwire and acquire up to all of Clearwire's common stock for $3.30 per share (subject to minimum ownership of at least 25% and granting of certain governance rights) and provide Clearwire with financing on specified terms. The DISH Proposal is only a preliminary indication of interest and is subject to numerous, material uncertainties and conditions, including the negotiation of multiple contractual arrangements being requested by DISH (some of which, as currently proposed, may not be permitted under the terms of Clearwire's current legal and contractual obligations) as well as regulatory approvals.
In connection with the Sprint Agreement, Clearwire and Sprint also entered into agreements that provide up to $800 million of additional financing to Clearwire in the form of exchangeable notes, which will be exchangeable under certain conditions for Clearwire common stock at $1.50 per share, subject to adjustment under certain conditions (the "Sprint Financing Agreements"). Under the Sprint Financing Agreements, Sprint has agreed to purchase, at Clearwire's option, $80 million of exchangeable notes per month for up to 10 months.
As previously disclosed on January 8, 2013, Clearwire did not take the initial draw under the Sprint Financing Agreements as DISH indicated that its preliminary proposal would be withdrawn were Clearwire to draw on the financing. In order to allow the Special Committee to continue to evaluate the DISH Proposal, at the direction of the Special Committee, Clearwire has not taken the February $80 million draw. The Special Committee has not made any determination with respect to any future draws under the Sprint Financing Arrangements.
Also, under the terms of the Sprint Financing Agreements, Sprint is only obligated to provide financing for the last three draws (in August, September and October 2013) if an agreement has been reached between Sprint and Clearwire on the accelerated build out of Clearwire's wireless broadband network by January 31, 2013. Although the parties have not come to an agreement on the accelerated build out, Clearwire and Sprint have amended the Sprint Financing Agreements to extend the date by which agreement on the accelerated build out must be reached to February 28, 2013 for the Company to be able to take the last three draws.
The Special Committee will, consistent with its fiduciary duties and in consultation with its independent financial and legal advisors, continue to evaluate the DISH Proposal and engage in discussions with each of DISH and Sprint, as appropriate. The Special Committee has not made any determination to change its recommendation of the current Sprint transaction.
The Special Committee and Clearwire will pursue the course of action that it believes is in the best interests of Clearwire's non-Sprint Class A stockholders. Neither Clearwire nor the Special Committee has any further comment on this matter at this time.
Evercore Partners is acting as financial advisor and Kirkland & Ellis LLP is acting as counsel to Clearwire. Centerview Partners is acting as financial advisor and Simpson Thacher & Bartlett LLP and Richards, Layton & Finger, P.A. are acting as counsel to Clearwire's Special Committee.