Clearwire Corp. said it plans to raise $300 million through an offering of its Class A common stock, bolstering the finances of the money-losing wireless broadband provider as it tries to turn profitable.
Clearwire will use the money for the build out of a higher- speed Long-Term Evolution, or LTE, wireless network and other operating expenses, the company said Monday. Overland Park-based Sprint Nextel Corp., which owns a majority of the stock in Clearwire, will buy Class B shares in a separate, private transaction.
The equity financings, coming four days after Sprint agreed to a new network-sharing deal worth as much as $1.6 billion over the next four years, puts Clearwire on much more stable financial footing, said Jonathan Chaplin, an analyst with Credit Suisse Group AG.
“This is transformative,” said Chaplin, who is based in New York and rates Clearwire “overweight.” “This was a company flirting with bankruptcy just a week ago.”
The deal last week came after a standoff over how the two would work together when their current network deal ends at the end of 2012. Sprint buys wholesale wireless capacity from Clearwire and then resells the service to its own customers.
Sprint said last week that if Clearwire raises between $400 million and $700 million, it would participate by buying equity equal to 49.6 percent of the total, consistent with Sprint’s voting interest in Clearwire. Sprint would purchase $148.8 million in Clearwire Class B shares if it maintains the same percentage for a Clearwire equity offering of $300 million.
Under the deal today, Clearwire said it expects to grant the underwriters a 30-day option to purchase up to an additional $45 million in Class A Common stock.