Clearwire Mails Letter to Stockholders Stating Proposed Transaction With
Sprint Provides Best Strategic Alternative for Clearwire's Minority
BELLEVUE, Wash., May 6, 2013 (GLOBE NEWSWIRE) -- Clearwire (Nasdaq:CLWR) today
mailed a letter to stockholders regarding its proposed transaction with Sprint
Nextel Corporation ("Sprint"). The letter describes the proposed transaction
with Sprint as providing the best strategic alternative for Clearwire's
minority stockholders, representing fair, attractive and certain value.
The full text of the letter follows:
May 6, 2013
On May 21, 2013, Clearwire will hold a Special Meeting of Stockholders to vote
on the proposed Sprint transaction. Clearwire stockholders of record as of the
close of business on April 2, 2013, are entitled to vote at the Special
PROPOSED TRANSACTION WITH SPRINT PROVIDES THE BEST STRATEGIC ALTERNATIVE FOR
CLEARWIRE'S MINORITY STOCKHOLDERS AND REPRESENTS FAIR, ATTRACTIVE AND CERTAIN
Clearwire's board of directors has always been committed to considering
strategic options and pursuing those that maximize stockholder value. A
Special Committee conducted a careful and rigorous review of all options
available to Clearwire, with the assistance of independent financial and legal
advisors. On the unanimous recommendation of the Special Committee, the
Clearwire board has unanimously concluded that the proposed transaction with
Sprint is the best strategic alternative for stockholders, representing fair,
attractive and certain value, especially in light of the Company's limited
alternatives and the well-known constraints of its liquidity position.
The proposed $2.97 per share offer price equates to a total payment to
Clearwire minority stockholders of approximately $2.2 billion. This
transaction represents a total Clearwire enterprise value of approximately $10
billion, including net debt and spectrum lease obligations of $5.5 billion.
Additional benefits include:
*Attractive spectrum value of $0.21 / MHz – POP;
*A ~130% premium to Clearwire's closing share price on October 10, 2012,
just before Sprint publicly acknowledged its merger discussions with
SoftBank, and Clearwire was speculated to be part of that transaction;
*A 40% premium to the closing share price on November 20, 2012, the day
before Clearwire received Sprint's $2.60 per share initial non-binding
indication of interest;
*Higher certainty of value for stockholders compared to other alternatives;
*Immediate liquidity to stockholders at transaction close.
SPRINT PROPOSAL WAS THOROUGHLY EVALUATED BY CLEARWIRE'S
BOARD OF DIRECTORS AND SPECIAL COMMITTEE
Clearwire formed a Special Committee, comprised of three directors independent
from Sprint. Clearwire's Special Committee hired its own legal and financial
advisors to evaluate and negotiate the Sprint transaction. Specifically, the
*Rejected Sprint's initial indication of interest of $2.60;
*Oversaw subsequent negotiations, leading to an increase in the offer price
of 14% and other more favorable terms; and
*Received a fairness opinion from its financial advisors that the $2.97
merger consideration was fair, from a financial point of view, to the
Company's non-Sprint stockholders.
In addition to the actions taken by the Special Committee outlined above, the
Board hired its own separate, independent legal and financial advisors and
received a fairness opinion stating that the $2.97 merger consideration was
fair, from a financial point of view, to the Company's non-Sprint
The $2.97 per share consideration represents a substantial premium to the
price received by other sophisticated investors in recent transactions. For
example, Google received $2.26 per share for its Clearwire Common Stock on
March 1, 2012, and Time Warner received $1.37 per share for its Clearwire
Common Stock on October 3, 2012.
In addition, Eagle River received $2.97 per share for its sale of Clearwire
Common Stock on December 17, 2012.
Other stockholders consider $2.97 to be a fair and compelling price: Comcast,
Intel, and Bright House Networks have committed to vote their shares in
support of the transaction. Collectively, these sophisticated investors own
approximately 13% of the voting shares, or approximately 26% of non-Sprint
CLEARWIRE'S STANDALONE PROSPECTS ARE RISKY AND HIGHLY UNCERTAIN
The proposed transaction with Sprint provides a clear solution to the
substantial funding gap Clearwire is facing. The Company's prospects of
securing the $2-$4 billion in additional funding necessary to continue
operations and the LTE build plan are highly uncertain. In evaluating the
Sprint transaction in the context of its funding constraints, the Special
Committee considered two sets of financial projections prepared by Clearwire's
*Single-Customer Case (SCC): Assumes Sprint remains Clearwire's only major
wholesale customer, and increases its wholesale purchases by over 500% to
over $2 billion by 2020.
*Multi-Customer Case (MCC): Requires substantial non-Sprint network traffic
beginning in 2014, which implies an immediate agreement with another major
*Industry reality is that many carriers have recently consolidated
spectrum positions and are focused on other strategic priorities.
*Despite concerted efforts and discussions with more than 100 targets,
Clearwire has failed to secure an additional major wholesale customer.
Both SCC and MCC have significant funding gaps that need to be addressed:
*SCC: Estimated $3.9 billion peak cash shortfall in 2017.
*MCC: Estimated $2.1 billion peak cash shortfall in 2015.
At the time Clearwire entered into the proposed Sprint transaction, it
disclosed in its third quarter 2012 filings that the Company had 12 months of
liquidity remaining, and in its first quarter 2013 filings the Company
disclosed that, even if it curtails or suspends its LTE build, its liquidity
will be depleted in the first quarter 2014 without securing additional
financing. Moreover, the Company believes that securing the additional
financing to fund the standalone business plan would be challenging, expensive
and highly dilutive to stockholders, if available at all.
SPRINT TRANSACTION REPRESENTS CULMINATION OF
RIGOROUS MULTI-YEAR STRATEGIC REVIEW
The Clearwire board and management undertook an extensive, multi-year process
to explore strategic and financial alternatives over the past two years, which
the Special Committee, with its advisors, also independently evaluated,
Alternative #1: Additional Wholesale Partners
*Without a second major wholesale customer, Clearwire's business plan is
exceedingly risky due to increasing dependence upon Sprint, its largest
customer, and a significant funding gap ($3.9 billion under SCC);
*MCC is only viable with another major wholesale customer in addition to
*Success remains unlikely given industry dynamics, and potential partners
expressed a strong preference for spectrum acquisition over a wholesale
partnership due to greater control.
Conclusion: Clearwire has been unsuccessful at attracting a second major
wholesale customer, despite concerted efforts and discussions with more than
Alternative #2: Monetize Excess Spectrum
*Clearwire's exhaustive sale process in 2010 involved contacting 37 parties
and did not result in an agreement;
*Since then, Clearwire has engaged in a series of conversations with a
number of parties that did not result in any compelling offers, including
a market check conducted in December of 2012;
*The proceeds of any sale of spectrum could be subject to significant tax
leakage and use of proceeds restrictions under Clearwire's existing debt
agreements and thereby wouldn't provide sufficient liquidity to the
*Outstanding proposals for Clearwire's spectrum are for premium portfolios
of either primarily owned spectrum or leased spectrum concentrated in
metro markets; Clearwire is unlikely to have buyer interest for all 47
billion MHz-POPs of spectrum above the $0.21/MHz-POP value implied by
Sprint proposal; and
*Even a sale of a meaningful block of spectrum would leave Clearwire
exposed to significant risks and would not solve Clearwire's long-term
liquidity challenges as it does not address the fundamental need for
significant additional revenues, and potentially reduces future demand for
Clearwire's network if sold to a potential wholesale customer.
Conclusion: A spectrum sale does not address, and may exacerbate, long-term
Alternative #3: Financing Alternatives (Debt / Equity Financing)
*Currently, Clearwire has an annual cash interest burden of approximately
$510 million and the interest burden created from additional debt
financing will further increase cash outflows and potentially result in an
untenable capital structure;
*Under its current debt agreements, Clearwire has extremely limited secured
borrowing capacity remaining;
*Fewer than 200 million available authorized shares limit our ability to
issue significant equity financing without approval from a majority of
stockholders (i.e. Sprint); and
*New unsolicited financing offers from Crest and Aurelius are not
actionable at this time without Sprint's approval.
Conclusion: Debt or equity financing would have unattractive terms, and would
be very expensive and dilutive to existing stockholders.
Alternative #4: Partnerships / Other Strategic Transactions
*Clearwire would not be able to sell the whole Company as Sprint has stated
that they are not willing sellers; and
*Under existing agreements, Clearwire's ability to offer meaningful
governance rights to new partners is limited.
Conclusion: A sale of the Company to a third party other than Sprint is
unlikely to occur due to Clearwire's governance structure and Sprint's
unwillingness to sell its stake.
Alternative #5: Financial Restructuring / Bankruptcy
*Clearwire's difficult liquidity situation will put it in a worse position
to negotiate any other strategic transaction, and financial restructuring
may be the only available alternative;
*Clearwire engaged Blackstone Advisory Partners and Kirkland & Ellis LLP to
explore the possibility of a financial restructuring in fall of 2011, and
has spent significant time with these advisors to understand the
implications and risks of restructuring;
*The process could take 24 months or longer and stockholders would be
unlikely to receive any value prior to completion; and
*The outcome of a financial restructuring is subject to many uncertainties,
− The existence of buyers in an auction for the entire Company;
− The ability to sell the entire spectrum portfolio without flooding the
market at non-distressed prices;
− Potential taxes on spectrum sales which could materially reduce value to
− Potential damages claims by Sprint which could be substantial and could
reduce value to stockholders, among others.
Conclusion: Represents a highly uncertain outcome for Clearwire stockholders,
and unlikely to yield value to stockholders exceeding $2.97 per share.
Given the comprehensive reviews of the alternatives, the Special Committee and
board of directors determined that the Sprint transaction is in the best
interests of the Company's non-Sprint stockholders.
MAXIMIZE THE VALUE OF YOUR INVESTMENT IN CLEARWIRE. VOTE "FOR" THE SPRINT
TRANSACTION ON THE WHITE PROXY CARD
The Clearwire board unanimously recommends that you vote your shares FOR all
of the proposals relating to the proposed transaction with Sprint by returning
the WHITE proxy card with a "FOR" vote for all proposals. The failure to vote
or an abstention has the same effect as a vote against the proposed
combination. Because some of the proposals required to close the proposed
transaction requires the affirmative vote of 75% of all outstanding shares,
the votes of all of Clearwire stockholders are important. If stockholders do
not approve the proposals related to the proposed combination, there is no
assurance that your shares of Clearwire common stock will be able to be sold
for the same or greater value in the future.
We urge you to discard any gold proxy cards you may receive, as they were sent
by a dissident stockholder. If you previously submitted a gold proxy card, we
urge you to cast your vote as instructed on the WHITE proxy card as soon as
you receive it. A vote on the WHITE proxy card will revoke any earlier dated
proxy card that was submitted, including any white proxy card. If you have
questions or need assistance voting your shares, please contact our proxy
solicitor, MacKenzie Partners, Inc., toll-free at (800) 322-2885 or call
collect at (212) 929-5500.
On behalf of your board of directors, we thank you for your continued support.
Chairman of the Board
If you have any questions, require assistance with voting your WHITEproxy
or need additional copies of the proxy materials, please contact:
MacKenzie Partners, Inc.
105 Madison Avenue
New York, NY 10016
(212) 929-5500 (Call Collect)
TOLL-FREE (800) 322-2885
Cautionary Statement Regarding Forward-Looking Statements
This document includes "forward-looking statements" within the meaning of the
securities laws. The words "may," "could," "should," "estimate," "project,"
"forecast," "intend," "expect," "anticipate," "believe," "target," "plan,"
"providing guidance" and similar expressions are intended to identify
information that is not historical in nature.
This document contains forward-looking statements relating to the proposed
merger and related transactions (the "transaction") between Sprint and
Clearwire. All statements, other than historical facts, including statements
regarding the expected timing of the closing of the transaction; the ability
of the parties to complete the transaction considering the various closing
conditions; the expected benefits and efficiencies of the transaction; the
competitive ability and position of Sprint and Clearwire; and any assumptions
underlying any of the foregoing, are forward- looking statements. Such
statements are based upon current plans, estimates and expectations that are
subject to risks, uncertainties and assumptions. The inclusion of such
statements should not be regarded as a representation that such plans,
estimates or expectations will be achieved. You should not place undue
reliance on such statements. Important factors that could cause actual results
to differ materially from such plans, estimates or expectations include, among
others, any conditions imposed in connection with the transaction, approval of
the transaction by Clearwire stockholders, the satisfaction of various other
conditions to the closing of the transaction contemplated by the merger
agreement, and other factors discussed in Clearwire's and Sprint's Annual
Reports on Form 10- K for their respective fiscal years ended December 31,
2012, their other respective filings with the U.S. Securities and Exchange
Commission (the "SEC") and the proxy statement and other materials that have
been or will be filed with the SEC by Clearwire in connection with the
transaction. There can be no assurance that the transaction will be completed,
or if it is completed, that it will close within the anticipated time period
or that the expected benefits of the transaction will be realized.
Clearwire does not undertake any obligation to update any forward-looking
statement to reflect events or circumstances after the date on which the
statement is made or to reflect the occurrence of unanticipated events.
Readers are cautioned not to place undue reliance on any of these
Additional Information and Where to Find It
In connection with the transaction, Clearwire has filed a Rule 13e-3
Transaction Statement and a definitive proxy statement with the SEC. The
definitive proxy statement has been mailed to the Clearwire's stockholders.
INVESTORS AND SECURITY HOLDERS ARE ADVISED TO READ THE DEFINITIVE PROXY
STATEMENT AND OTHER RELEVANT MATERIALS BECAUSE THEY CONTAIN IMPORTANT
INFORMATION ABOUT CLEARWIRE AND THE TRANSACTION. Investors and security
holders may obtain free copies of these documents and other documents filed
with the SEC at the SEC's web site at www.sec.gov. In addition, the documents
filed by Clearwire with the SEC may be obtained free of charge by contacting
Clearwire at Clearwire, Attn: Investor Relations, (425) 505-6494. Clearwire's
filings with the SEC are also available on its website at www.clearwire.com.
Participants in the Solicitation
Clearwire and its officers and directors and Sprint and its officers and
directors may be deemed to be participants in the solicitation of proxies from
Clearwire stockholders with respect to the transaction. Information about
Clearwire officers and directors and their ownership of Clearwire common
shares is set forth in the definitive proxy statement for Clearwire's Special
Meeting of Stockholders, which was filed with the SEC on April 24, 2013.
Information about Sprint officers and directors is set forth in Sprint's
Annual Report on Form 10-K for the year ended December 31, 2012, which was
filed with the SEC on February 28, 2013. Investors and security holders may
obtain more detailed information regarding the direct and indirect interests
of the participants in the solicitation of proxies in connection with the
transaction by reading the definitive proxy statement regarding the
transaction, which was filed by Clearwire with the SEC.
CONTACT: Media Contacts:
Susan Johnston, (425) 505-6178
JLM Partners for Clearwire
Mike DiGioia or Jeremy Pemble, (206) 381-3600
email@example.com or firstname.lastname@example.org
Alice Ryder, (425) 505-6494
MacKenzie Partners for Clearwire
Dan Burch or Laurie Connell, (212) 929-5500
email@example.com or firstname.lastname@example.org
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