Sprint to raise $2B in fresh debt, may help fund Clearwire

Sprint Nextel (NYSE:S) said it intends to raise $2 billion in notes and may use some of the proceeds to fund Clearwire (NASDAQ:CLWR). The fresh debt offering comes after Sprint raised $4 billion in debt in November.

The sale of notes, which will be completed by March 1, will allow Sprint to refinance outstanding debt, cover the costs of network expansion and modernization and may be used to help fund Clearwire. The new notes are being issued at substantially lower interest rates than what Sprint paid in November. In a statement, Sprint said it will sell notes due in 2017 and 2020, and the sale includes five-year notes at 9.13 percent and eight-year debt, which will be guaranteed by Sprint units, at 7 percent.

The debt sale comes after a spate of reports that Sprint's board nixed a proposal to acquire regional prepaid carrier MetroPCS (NYSE:PCS) last week. Multiple reports said the deal would have valued MetropCS at $8 billion.

Sprint is in the midst of a multibillion-dollar network upgrade called Network Vision, which will allow Sprint to deploy LTE and shut down its iDEN network while reducing costs. Sprint also has a four-year, $15.5 billion contract with Apple (NASDAQ:AAPL) to sell the iPhone.

As for Clearwire, Sprint remains Clearwire's largest investor and wholesale customer and still has a 54 percent economic stake in the company. Sprint also contributed $331.4 million in fresh equity to Clearwire in recent in months as part of a round of funding in which Clearwire raised $1.1 billion. Clearwire intends to launch 5,000 TD-LTE cell sites by June 2013. However, the company said last week that despite the fresh funds, which will carry it through the end of 2012, it may have to raise substantial amounts of cash after that.

"We do not expect our operations to generate cumulative positive cash flows during the next 12 months," the company said in a recent SEC filing. "We may need to raise substantial additional capital to fund our business."

For more:
- see this release
- see this Bloomberg article
- see this WSJ article (sub. req.)
- see this Reuters article

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