Clearwire needs Sprint funding to last the year
13 February 2013 |
US wireless service provider Clearwire said yesterday that it would require financing from its largest shareholder Sprint to keep afloat until the end of the year.
The company has been an acquisition target for both Sprint and Dish Network and accepted a $2.97 per share bid from Sprint in December. This was followed by a $3.30 per share counter offer from Dish Network in January.
Clearwire was previously a champion of WiMAX technology and is now spending heavily to roll out its LTE network.
The company said it would need as much as $240 million of financing from Sprint to stay fully funded until the end of the year and up to $250 million of vendor financing.
BTIG analyst Walt Piecyk told Reuters that the funding forecast would potentially allow Clearwire to go a few more months without Sprint’s offering, giving it time to negotiate with Dish.
As it is in the process of reviewing the Dish bid, Clearwire has twice been unable to draw from a $80 million monthly financing offer from Sprint. Dish said its offer would be withdrawn if Clearwire took the financing.
Sprint offered Clearwire $800 million convertible notes in installments over 10 months, meaning it could still accept $640 million in the next few months.
Market watchers have speculated whether Dish’s offer is serious given that it would not gain full control of the company as Sprint already owns 51% of Clearwire’s voting shares.
Dish chairman Charlie Ergen dismissed these doubts on Monday by saying that the offer was “not illusory” and Sprint would have to fend off the bid.
Clearwire said in December that it was at risk of going through a financial restructuring unless it was bought out by Sprint, but the Dish offer has presented an alternative.
Sprint still requires shareholder approval for the deal to go ahead and may receive a frosty reception from some shareholders, who have complained that the US carrier’s offer is not high enough.
Clearwire posted its fourth quarter and full year results yesterday recording a net loss of $187.15 million compared to a loss of $236.85 million in 4Q11.
The company’s revenue for the fourth quarter was down $311.2 million from $361.87 million the year before.
Total revenue for 2012 was up 1% year over year to $1.26 billion from $1.25 billion in 2011.
16h | James Pearce
17h | James Pearce
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17h | Alan Burkitt-Gray