Sprint Nextel (NYSE:S) said it currently has no plans to acquire mobile WiMAX operator Clearwire (NASDAQ:CLWR), clearing the air over the firm's financial fate now that Clearwire has secured new debt financing.
In a statement issued late Monday congratulating Clearwire on its recent financing, Sprint said the new debt demonstrates Clearwire's strength as a wholesale provider of 4G services to Sprint. Sprint said it continues to discuss with Clearwire whether to provide further investment. Earlier this year, Sprint executives intimated they would ultimately like to have more control over Clearwire, in which Sprint has a 54 percent stake, but that Sprint currently lacks the resources to do so.
Clearwire announced a debt offering of $1.33 billion earlier this month. Sprint said it has not yet decided whether to exercise its rights to buy up to $760 million in convertible bonds; it has until Jan. 2 to do so.
Interestingly, Sprint also said it struck a new deal with Clearwire that will allow Sprint to reduce its voting rights below 50 percent without reducing its economic stake in Clearwire. This will allow Sprint to avoid any liquidity risks if Clearwire defaults on its debt. In a filing earlier this fall with the Securities and Exchange Commission, Sprint had noted that if Clearwire defaulted, Sprint could also be at risk of defaulting on its own debt obligations if Clearwire was seen as a subsidiary of Sprint.
Clearwire is still considering a sale of some of its spectrum as well as new equity financing, and hopes to have one or both of those funding issues resolved in either the fourth quarter of this year or the first quarter of next year, CFO Erik Prusch said earlier this month.
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