Investment company Crest Financial has once again lashed out at Sprint’s proposed takeover of Clearwire, urging Clearwire’s management to shun the “coercive” terms.
Crest (Cerritos, CA, USA) owns a 5.1% stake in Clearwire (Bellevue, WA, USA) and claims to be the largest shareholder that is unaligned with Sprint.
The company is vehemently opposed to the deal, which would see Sprint (Overland Park, KS, USA) acquire full control of Clearwire, and last month hired proxy-solicitation firm D.F. King & Co. (New York City, NY, USA) to help it fight the planned takeover.
Sprint currently owns 50.8% of Clearwire and needs a majority of other Clearwire shareholders to back its $2.2 billion bid for the deal to proceed.
Under the terms of the deal, Sprint would also provide financing of up to $800 million that Clearwire could access in $80 million installments over a period of 10 months.
Clearwire has announced that it will hold a meeting on 21 May at which shareholders will be able to vote on the transaction.
“Clearwire’s crown jewel is its spectrum, and you, the Clearwire board, are letting Sprint seize it for a grossly inadequate price and through and unfair coercive process,” said David K. Schumacher, the general counsel for Crest, in a letter sent to Clearwire’s board this week.
“By abandoning your independent build-out plans, tying yourself to Sprint, tightening the noose by taking Sprint’s coercive debt, crying wolf about potential insolvency and failing to take the lifeline offered by Crest … you have converted fair value for Clearwire into a super-premium for Sprint,” he added. “This offends, indeed defies, every tenet of fiduciary duty.”
Crest’s letter urges Clearwire’s board to consider alternative debt-financing offers from Crest and Aurelius Capital Management (New York City, NY, USA).
Earlier this month, hedge fund Aurelius offered financing of $80 million to Clearwire under a convertible debt-financing plan, while Crest has offered $240 million in debt financing.
Crest says the Clearwire board should also look at proposals from Verizon (New York City, NY, USA) and Dish Network (Meridian, CO, USA) to buy some of the operator’s spectrum.
“Instead of engaging with Dish on its offer to purchase spectrum, you dismissed it as ‘preliminary’ even as you rushed straight into Sprint’s headlock,” wrote Schumacher to Clearwire’s board. “You have acted at all times to deliver all the value of Clearwire not to its stockholders but to Clearwire alone.”
Crest’s letter came in the same week that Sprint reported first-quarter earnings, showing a narrowing of its loss to $643 million, from $863 million a year ago.
The operator grew revenues from $8.73 billion to $8.79 billion, beating analyst predictions, but registered 560,000 subscriber losses against expectations of 525,000.
While bidding for Clearwire, Sprint is the target of rival takeover bids from Softbank (Tokyo, Japan), which has offered to buy a 70% stake in the company for $20.1 billion, and Dish, which last week unveiled its own $25.5 billion offer for the operator.