The Board of Directors of Clearwire (Nasdaq:CLWR) ("Clearwire" or
the "Company") today mailed a letter to stockholders in connection
with its proposed transaction with Sprint recommending that
stockholders vote 'FOR' the proposed transaction. The letter
highlights the favorable recommendations of leading proxy advisory
services and conveys compelling reasons why this transaction is the
best strategic alternative for shareholders by correcting
misperceptions in the marketplace.
The full text of the letter follows:
May 13, 2013
Dear Fellow Stockholder:
Like you, I am a holder of Clearwire stock. My family and I have
been investors in the Company since 2008.
The decision facing all of us, to approve the transaction with
Sprint, requires a realistic analysis of Clearwire's strategic
alternatives. When the facts are distilled and the circumstances
surrounding this proposed merger are fairly assessed, I believe
that the merger with Sprint is the best strategic alternative for
all stockholders because it delivers fair, attractive and certain
value, especially in light of Clearwire's limited alternatives and
liquidity constraints.
Clearwire stockholders of record as of the close of business on
April 2, 2013, are entitled to vote at the Special Meeting of
Stockholders scheduled to occur on May 21, 2013. The Clearwire
board unanimously recommends that you vote your shares FOR
all of the proposals relating to the transaction with
Sprint by returning the WHITE proxy card with a
"FOR" vote for all proposals.
LEADING PROXY ADVISORY FIRM ISS RECOMMENDS CLEARWIRE
STOCKHOLDERS VOTE 'FOR' PROPOSED TRANSACTION WITH
SPRINT
Institutional Shareholder Services ("ISS") is the leading firm
that independently advises shareholders. ISS recommends that
stockholders vote FOR the proposed Sprint transaction, affirming
the board's conclusion that this combination is the best strategic
alternative for Clearwire's minority stockholders.
In its report dated May 10, 2013, ISS stated:*
"The current [Sprint] offer falls within an appropriate
valuation range as determined by evaluating independent analyst
price targets, relative share price premia, and precedent
transactions for similar spectrum."
"Because the sales process appears to have been both extensive
and well-known in the industry; CLWR's business is increasingly
unviable on a stand-alone basis; the company requires interim
financing from Sprint to fund operations and satisfy interest
payments...a vote FOR the transaction is warranted."
ISS has endorsed the process of the strategic and financial
review conducted by the Special Committee and the board of
directors, and agrees with the recommendation that the Sprint
transaction is in the best interests of Clearwire's non-Sprint
stockholders. Clearwire's standalone prospects are risky and
highly uncertain; we urge you to maximize the value of your
investment in Clearwire and follow ISS's recommendation by voting
for the Sprint transaction.
THE SPRINT TRANSACTION WAS THE RESULT OF
A RIGOROUS MULTI-YEAR STRATEGIC REVIEW
Over a period of two years, the Clearwire board and management
undertook an extensive process to explore strategic and financial
alternatives.
Strategic alternatives evaluated and pursued included:
-- Additional wholesale partners |
-- Strategic transactions including
partnerships |
-- A spectrum sale |
-- Financial restructuring or bankruptcy |
-- Financing alternatives (debt, equity) |
|
When the potential arose that Sprint might make an offer for the
shares of Clearwire that it did not already own, the Clearwire
board promptly formed a Special Committee solely comprised of
directors independent from Sprint. The Special Committee hired
its own legal and financial advisors and conducted a careful and
rigorous process, meeting 10 times between its formation and the
transaction announcement. The Special Committee carefully examined
numerous alternatives, including conducting an extensive market
check of potential spectrum acquirers as well as spending
significant time with outside advisors to understand the
implications and risks associated with a financial
restructuring.
It was after completion of this extensive and comprehensive
process that both the Special Committee and the entire
board of directors unanimously determined that the Sprint
transaction was the best alternative for Clearwire's
stockholders.
SPRINT TRANSACTION OFFERS WHAT THE
ALTERNATIVES CANNOT: FAIR, ATTRACTIVE AND CERTAIN
VALUE
Our stock has been as low as $0.83 in the last year. The
proposed $2.97 per share offer price equates to a total payment to
Clearwire minority stockholders of approximately $2.2 billion,
representing a:
- 130% premium to Clearwire's closing share
price on October 10, 2012, the day prior to speculation regarding
Clearwire's involvement in the SoftBank-Sprint merger
negotiations
- 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
- 31% premium to the price received by Google
for its Clearwire Common Stock on March 1, 2012
- 117% premium to the price received by Time
Warner for its Clearwire Common Stock on October 3, 2012
In addition, Comcast, Intel, and Bright House Networks –
which together own ~13% of Clearwire's voting shares, or ~26% of
non-Sprint voting shares – all significant Clearwire stockholders,
have pledged to vote their shares in support of the
transaction.
SETTING THE RECORD STRAIGHT
Opponents of the transaction have made a series of assertions
that are inaccurate and unsupported. We urge you to look past
the false suggestions that Clearwire has numerous viable or
attractive alternatives to consider. We want to ensure that
all stockholders make an informed decision, so let us set the
record straight by correcting the misperceptions regarding the
Sprint transaction:
Misperception #1: Multi-Customer Case (MCC) is
Achievable
Reality: There is significant uncertainty in the
achievability and timing of signing an additional wholesale
customer of size. With or without a second major customer,
Clearwire's funding gap is significant.
- MCC is only viable with another major wholesale customer in
addition to Sprint;
- We have aggressively pursued the MCC for the past two years,
and approached nearly 100 potential partners without success in
securing a major wholesale partner in addition to Sprint; and
- Without interest from other significant potential customers,
the ~$2 billion funding gap in the MCC quickly grows to the ~$4
billion funding gap in the Single Customer Case (SCC)
- The net proceeds from a sale of spectrum still would not be
adequate to fund this shortfall and would not address the need for
another large wholesale partner; and
- Clearwire has limited authorized shares available (fewer than
200 million) for new equity investments, and additional debt
financing would likely be expensive and dilutive and create an
untenable capital structure.
Misperception #2: Implied Spectrum Valuation is Below Market
Reality: 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.
- Our exhaustive sale process in 2010 involved contacting 37
parties and did not result in an agreement;
- Since then, we have 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; and
- Preliminary, conditional offers from DISH and Verizon are for
premium portions of Clearwire's spectrum: the DISH proposal is for
a portfolio comprised of primarily owned spectrum; and the Verizon
offer is for leased spectrum primarily in large metro
markets.
Misperception #3: Terms of Sprint Notes are Unfavorable
Reality: The Note Purchase Agreement with Sprint
provides liquidity to Clearwire to continue operations and build
out its network during the pendency of the merger.
- Multiple components contribute to the value of the exchangeable
note, including the coupon, the exchange price, and when the notes
may be exchanged, which must all be considered together; and
- The $1.50 exchange rate represents a premium to the unaffected
share price prior to the Sprint-SoftBank rumors when Clearwire was
speculated to be part of that transaction – Clearwire shares closed
at $1.30 on October 10, 2012.
Misperception #4: Financial Restructuring/Bankruptcy Would
Result in Higher Value for Stockholders
Reality: There is significant uncertainty for
stockholders in a financial restructuring filing.
- The value stockholders could receive in a financial
restructuring is subject to many uncertainties, including:
- 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 stockholders; and
- Potential damages claims by Sprint which could be substantial
and could reduce value to stockholders, among others.
- The outcome is unlikely to yield value to stockholders
exceeding Sprint's $2.97 per share offer.
Misperception #5: Clearwire Should Pursue Path to Independence
Offered by Recent Proposals
Reality: Clearwire is evaluating these opportunities,
however, there are significant risks and the outcome to
shareholders would be highly uncertain.
- There are significant risks and challenges to the proposed
alternatives, which are preliminary and non-binding, and if they
cannot be mitigated, it is unlikely they will provide greater
stockholder value than the Sprint offer;
- A spectrum sale does not solve the fundamental need for
significant additional revenues, and would not provide sufficient
liquidity for operations;
- Additional financing may be challenging, expensive and dilutive
to stockholders, if available at all; and
- 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.
Misperception #6: A Sale of Spectrum Would Provide Sufficient
and Immediate Liquidity to Maintain Our Independence
Reality: A spectrum sale would provide limited liquidity
to fund operations, and may create additional
challenges.
- The timeframe for closing a spectrum sale would be at least six
months after the definitive agreements are signed; would not
improve liquidity prior to completion;
- The gross proceeds of a spectrum sale will be reduced by the
net present value of spectrum leases, taxes, and distributions; the
remaining amount cannot be freely applied to fund operations, as it
must be used to acquire replacement assets or repay debt;
- There are restrictions on the total amount of spectrum that can
be sold without Sprint's consent; and
- Clearwire could end up in a worse position by selling a premium
portfolio, as the remaining assets would be less desirable, and the
sale may reduce potential future demand for our network.
ANALYSTS AND OTHER CREDIBLE COMMENTATORS
RECOGNIZE THE RISKS TO STOCKHOLDERS ABSENT A
TRANSACTION
The proposed transaction with Sprint provides a clear solution
to the substantial funding gap Clearwire is
facing. Absent the Sprint transaction, Clearwire's prospects
of securing the $2-$4 billion in additional funding necessary to
continue operations and the LTE build plan are highly
uncertain. If the merger agreement terminates as a result of
shareholders failing to approve the merger, the remaining Sprint
funding would not be available, and without alternative sources of
capital we would have to curtail or suspend substantially all of
our TDD-LTE network build plan. In such case, we forecast that
our cash and short-term investments would be depleted sometime
during the first quarter of 2014.
Equity analysts recognize Clearwire's liquidity constraints, and
warn investors of the implications:*
- "Shareholder disapproval of Sprint deal could result in a
liquidity event." – Jefferies, April 26, 2013
- "Delays Not Good for Clearwire: The concern is that the
complicated scenario surrounding CLWR / Sprint / SoftBank / Dish
could delay an ultimate conclusion for CLWR which, given its
financial standing, would not be encouraging, in our view." –
Stifel Nicolaus, April 25, 2013
- "If Clearwire had rejected Sprint's offer, it would not only
have lost the only logical buyer of the company but also put its
single largest revenue stream in jeopardy for the future." – Piper
Jaffray, December 17, 2012
- "We believe this transaction is in the best interests of both
shareholder bases, providing a substantial premium for Clearwire
shareholders while finally putting the conflict between the firms
to rest ... Clearwire will no longer sit in an awkward
position attempting to source additional financing while also
building a viable business around the Sprint relationship."
– Morningstar, December 17, 2012
As previously stated, Clearwire 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. Moreover, Clearwire is required to obtain
the consent of Sprint before entering into new financing
arrangements other than those agreed to under the merger
agreement.
In addition, our board of directors is actively considering
whether to not make the June 1, 2013, interest payment on our
approximately $4.5 billion of outstanding debt. If the merger
is not completed, we may be forced to explore all available
alternatives, including restructuring, which could include seeking
protection under the provisions of the United States Bankruptcy
Code. We can give you no assurance that in a restructuring you
would receive any value for your shares or a value equal to or in
excess of the merger consideration.
The Clearwire board urges you not to take
that chance.
Please consider all the facts. Don't be convinced
otherwise: the Clearwire board is confident that, absent the Sprint
transaction, the Company's options become increasingly limited and,
day by day, the future value for stockholders becomes even more
unclear.
MAXIMIZE THE VALUE OF YOUR INVESTMENT IN
CLEARWIRE
VOTE "FOR" THE SPRINT TRANSACTION ON THE
WHITE PROXY CARD TODAY
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.
Sincerely,
John Stanton
Executive Chairman of the Board
|
|
If you have any questions, require
assistance with voting your WHITE proxy card, |
or need additional copies of the proxy
materials, please contact: |
|
MacKenzie Partners, Inc. |
105 Madison Avenue |
New York, NY 10016 |
|
proxy@mackenziepartners.com |
|
(212) 929-5500 (Call Collect) |
Or |
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 forward-looking
statements.
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 23, 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.
*Permission to use quotations was neither sought nor
obtained.
CONTACT: Media Contacts:
Susan Johnston, (425) 505-6178
susan.johnston@clearwire.com
JLM Partners for Clearwire
Mike DiGioia or Jeremy Pemble, (206) 381-3600
mike@jlmpartners.com or jeremy@jlmpartners.com
Investor Contacts:
Alice Ryder, (425) 505-6494
alice.ryder@clearwire.com
MacKenzie Partners for Clearwire
Dan Burch or Laurie Connell, (212) 929-5500
dburch@mackenziepartners.com or lconnell@mackenziepartners.com
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