Clearwire to take $80 million payment from Sprint, complicating Dish's bid

Clearwire (NASDAQ:CLWR) said it would take an $80 million payment from Sprint Nextel (NYSE:S), a part of Sprint's $2.97-per-share offer to buy the 50 percent of Clearwire that it does not already own. The move complicates Dish Network's (NASDAQ: DISH) $3.30-per-share counterbid to Clearwire, since Dish said it would withdraw its offer if Clearwire took the money.

Clearwire's special board committee evaluating the deals said that it had not changed its position to recommend Sprint's offer and that over the last two months it had engaged in discussions with Dish and with Sprint and would continue such discussions.

Clearwire had amended its deal with Sprint so that it had until Feb. 28 to decide whether to take the financing. Dish declined to comment.

The special committee of the board has not yet decided whether to take any more $80 million monthly payments from Sprint, which are designed to provide interim financing for Clearwire. Clearwire has forfeited its right to the first two months of payments, but has modified an agreement with Sprint that would allow it to receive the last three payments in August, September and October. Clearwire got Sprint to drop a provision that require an accelerated buildout agreement for Clearwire's TD-LTE network, and Clearwire said it does not expect to enter into such an agreement with Sprint at this point. 

Clearwire's minority shareholders still need to approve the Sprint offer and have indicated they want to see Sprint raise its price. They have argued that Sprint's offer undervalues Clearwire, especially its spectrum resources. "There has been no date set for the vote and [Dish Chairman Charlie] Ergen can presumably make overtures at any point up until the vote has taken place and the deal approved," BTIG analyst Walter Piecyk wrote. "We suspect that Ergen is not done with the Clearwire process quite yet."

Dish Chairman Charlie Ergen said earlier this month that the company would consider a partnership with Sprint if its Clearwire bid went through. "If that transaction [Dish's offer to Clearwire] went through, Sprint's your most likely partner," Ergen said on Dish's fourth-quarter earnings conference call. "The reverse of that is...that offer is not accepted or there's a bidding war for Clearwire, right? And were we to lose that bidding war or if we were not to prevail for our offer for Clearwire, then Sprint's probably not a likely partner."

As part of Dish's offer, Dish wants to acquire Clearwire spectrum covering approximately 11.4 billion MHz-POPs, which is approximately 24 percent of Clearwire's total spectrum holdings, for $2.2 billion. Additionally, under the Dish offer, Clearwire could sell or lease an additional 2 MHz of its spectrum to Dish and it could also provide certain services such as network management, construction and maintenance for a network in Dish's AWS-4 spectrum.

The prize remains Clearwire's spectrum. Clearwire commands around 160 MHz of spectrum in the top 100 markets, and Sprint said its Network Vision network architecture would allow it to efficiently deploy TD-LTE on those radio waves.

For more:
- see this release
- see this Reuters article
- see this Bloomberg article
- see this AllThingsD article
- see this BTIG blog post (reg. req.)

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