Clearwire Holder Seeks Independent Review Of Strategic Options

Date : 05/25/2011 @ 3:03PM
Source : Dow Jones News
Stock : Clearwire Corp. - Class A (MM) (CLWR)
Quote : 4.99  0.0 (0.00%) @ 2:05AM

Clearwire Holder Seeks Independent Review Of Strategic Options

Clearwire Corp. - Class A (MM) (NASDAQ:CLWR)
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A Clearwire Corp. (CLWR) shareholder is seeking more independent oversight of the company's dealing with majority owner Sprint Nextel Corp. (S).

Clearwire should form a committee composed of non-Sprint-designated board members to review options such as the sale of spectrum, as well as the company's dealings with Sprint, according to a letter written by activist shareholder Pardus Capital Management LP and sent May 20 to Clearwire's top investors. The letter was also sent to Clearwire Chief Executive John Stanton.

Clearwire provides high-speed wireless service through various providers, including Sprint.

The letter highlights the inherent awkwardness in a relationship where Sprint is both the largest shareholder and customer of Clearwire, but insists on keeping an arm's length distance from the company. With Clearwire facing a possible cash shortage at the end of the next 12 months, many observers expect Sprint to either provide funding or buy the company outright.

Pardus argues that there is a conflict of interest in having board members who are designated by Sprint negotiate with the company on Clearwire's behalf.

"We find troubling some of Clearwire's recent steps which suggest to us the company is increasingly disadvantaged vis-a-vis Sprint," Karim Samii, president of Pardus, said in the letter.

Clearwire said it received the letter, but declined to comment on its shareholder interactions.

Sprint wasn't immediately available for comment Wednesday.

While Clearwire will be able to continue operations for the next 12 months, Samii said the company likely again will face longer-term funding issues by the end of this year.

Pardus wants an independent committee to reopen the exploration of the sale of its spectrum, which would give Clearwire financial flexibility. The firm said the sale would demonstrate to Sprint and the market that the company needs Clearwire as much as or more than Clearwire needs Sprint.

Sprint and Clearwire recently settled a dispute over wholesale pricing. Sprint pays Clearwire for 4G data that streams through smartphones such as the Evo 4G from HTC Corp. (2498.TW, HTCXF). Pardus said the terms of the agreement were worse than it expected.

"The market took this as a 'sweetheart' deal for Sprint," Samii said.

Clearwire shares recently fell 2.2% to $4.51. Sprint shares recently rose 1.2% to $5.91.

-By Roger Cheng, Dow Jones Newswires; 212-416-2153;

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