Clearwire Corp. said it will tap into $80 million in financing from Sprint, a move that appears to weaken opposition by Dish Network over the proposed sale of the wireless network operator.
By STEVE ROSEN
The Kansas City Star
The money is part of a 10-month, $800 million financing offer that Overland Park-based Sprint extended to Clearwire when it agreed to buy the companys shares in December for $2.97 each. Sprints $2.2 billion offer was for the 49 percent of Clearwire that it didnt already own.
Sprint said in a statement that it was pleased with Clearwires decision to draw on the funding available to it under its merger agreement.
Clearwire, based in Belleview, Wash., hasnt decided whether it will take more than one month of payments, though it has already lost the right to draw on the January and February installments, according to a statement Wednesday.
Clearwire also said it is still in discussions with Dish and will pursue the course of action that it believes is in the best interests of its non-Sprint shareholders.
Dish made a $3.30-a-share counteroffer in January for Clearwire amounting to about $5.2 billion.
Shares of Clearwire dipped 2 cents and closed at $3.18. Sprint gained 8 cents to $5.86, while Dish dropped 27 cents to $34.87.
The financing move may force Dish co-founder Charlie Ergen to respond, said Walt Piecyk, an analyst with BTIG. Earlier this week, Dish asked federal regulators to carefully review Tokyo-based Softbanks $20 billion bid to buy controlling interest in Sprint. Dish raised concerns over possible foreign control over the network of the nations third-largest wireless company.
Clearwires minority investors also have been lobbying for a better offer than Sprints deal. By taking the Sprint financing, Clearwire is signaling that it is moving closer to accepting the original offer.
The ball now moves into Charlies court, Piecyk told Bloomberg News. Either he modifies his offer or backs off.
Clearwires main asset is its wireless spectrum space on the airwaves that could be used to provide high data download speeds, a crucial competitive factor in todays wireless industry. But Clearwires frequencies are difficult to use. They require many cell towers to cover an area, and the signals dont penetrate well into buildings.
Sprint is trying to buy out the rest of the shares so it can use Clearwires airwaves to bolster its own network. Though Dish offered a higher price, that bid is more complex and may require Sprints consent to be completed.
Dish has said that its proposal would require Clearwire to terminate its financing agreement with Sprint. Bob Toevs, a Dish spokesman, declined to comment.
Bloomberg News contributed to this story. To reach Steve Rosen, call 816-234-4879 or send email to firstname.lastname@example.org.