Cash-strapped Clearwire to offer up USD300m of Class A shares to fund LTE rollout

6 Dec 2011

US WiMAX operator Clearwire has announced plans to offer USD300 million worth of Class A common stock in a registered public offering. In addition, Clearwire also expects to grant the underwriters a 30-day option to purchase a further USD45 million worth of common stock if there is excess demand. Further, Sprint Nextel – Clearwire’s largest shareholder – has agreed to buy a corresponding number of Class B shares. Sprint has the right to match any new investment in Clearwire to maintain its 49.6% voting stake in the company. Other shareholders in Clearwire include chip manufacturer Intel, search engine giant Google, plus cable operators Comcast, Time Warner Cable and Bright House Networks.

Cash-strapped Clearwire plans to use the net proceeds of the public offering to fund the deployment of its proposed Long Term Evolution (LTE) network, which it hopes to roll out in 2012, targeting ‘densely populated, urban areas of Clearwire’s existing 4G markets where current 4G usage demands are high’. Recent months have seen the WiMAX operator dogged with speculation over how it intends to fund its LTE network, and last week Sprint agreed to provide Clearwire with a cash injection of USD1.6 billion. As a result Sprint will continue to use Clearwire’s WiMAX network until 2015, whilst agreeing to stump up USD350 million in a series of pre-payments over the next two years for capacity on the LTE network. However, in return, Clearwire is obliged to achieve certain rollout milestones by June 2013. The agreement also established long-term, usage-based pricing for LTE services for 2012 and beyond. In the short term, the deal allowed financially-stricken Clearwire to fulfil USD237 million in debt payments that it would have otherwise forfeited.

United States, Clearwire, Sprint Corporation (now part of T-Mobile US)