UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the
Registrant
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Filed by a
Party other than the Registrant
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Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to § 240.14a-12
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Clearwire Corporation
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(1)
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Title of each class of securities to which transaction applies: Class A Common Stock, par value $0.0001 per share, of Clearwire
Corporation
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(2)
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Aggregate number of securities to which transaction applies: (A) 668,248,967 shares of Class A Common Stock outstanding and
not beneficially owned by Sprint Nextel Corporation, SOFTBANK CORP. or any of their respective affiliates, (B) 65,644,812 shares of Class B Common Stock and Class B Common Units of Clearwire Communications, LLC outstanding and not beneficially
owned by Sprint Nextel Corporation, SOFTBANK CORP. or any of their respective affiliates, which can be exchanged into 65,644,812 shares of Class A Common Stock, (C) 30,840,354 restricted stock units outstanding or reserved for issuance
pursuant to awards made under the Companys 2012 Performance Long-Term Incentive Plan and (D) 2,000,000 shares of Class A Common Stock issuable upon exercise of outstanding warrants with an exercise price of less than
$3.40.
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(3)
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined): solely for purposes of calculating the registration fee, the maximum aggregate value of the transaction was calculated as the sum of (A) 668,248,967 shares of Class A Common Stock
outstanding and not beneficially owned by Sprint Nextel Corporation, SOFTBANK CORP. or any of their respective affiliates, multiplied by $3.40 per share, (B) 65,644,812 shares of Class B Common Stock and Class B Common Units of Clearwire
Communications, LLC outstanding and not beneficially owned by Sprint Nextel Corporation, SOFTBANK CORP. or any of their respective affiliates, which can be exchanged into 65,644,812 shares of Class A Common Stock, multiplied by $3.40 per share,
(C) 30,840,354 restricted stock units outstanding or reserved for issuance pursuant to awards made under the Companys 2012 Performance Long-Term Incentive Plan, multiplied by $3.40 per share and (D) 2,000,000 shares of Class A
Common Stock issuable upon exercise of outstanding warrants with an exercise price of less than $3.40, multiplied by $1.65 per share (which is the excess of $3.40 over the weighted average exercise price of such warrants)
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(4)
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Proposed maximum aggregate value of transaction: $2,603,396,052.20
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(5)
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Total fee paid: $355,103.22*
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* Includes $310,183.92 previously paid.
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Fee paid previously with preliminary materials.
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x
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify
the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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(1)
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Amount previously paid:
$310,183.92
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(2)
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Form, Schedule or Registration Statement No.:
Schedule 14A
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(3)
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Filing Party:
Clearwire Corporation
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(4)
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Date Filed:
February 1, 2013 and March 12, 2013
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Clearwire Corporation
1475 120th Avenue Northeast
Bellevue, Washington 98005
May 22, 2013
Dear
Stockholders:
On or about April 23, 2013, we mailed you a proxy statement relating to a Special Meeting of the
stockholders of Clearwire Corporation, which we refer to as the Company or Clearwire, originally scheduled to have been held on May 21, 2013, to consider and vote on, among other things, a proposal to adopt the Agreement and Plan of Merger,
dated as of December 17, 2012 and amended as of April 18, 2013, by and among Sprint Nextel Corporation, Collie Acquisition Corp., a wholly-owned subsidiary of Sprint, and the Company.
The purpose of this supplement to the proxy statement is to:
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Advise you that the parties to the Merger Agreement have executed an Amendment dated as of May 21, 2013 to the Merger Agreement to increase the
per share merger consideration from $2.97 per share of Clearwires Class A common stock to $3.40 per share of Clearwires Class A common stock; and
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Update additional disclosures included in the proxy statement.
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If the merger is completed, each outstanding share of Clearwires Class A common stock, par value $0.0001 per share (other than
shares held by Sprint, SoftBank Corp., or any of their respective direct or indirect wholly-owned subsidiaries and any stockholders who properly exercise their appraisal rights under Delaware law), will automatically be converted into the right to
receive $3.40 in cash, without interest, less any applicable withholding taxes.
Our board of directors, upon the
recommendation of a Special Committee of the board consisting of three independent and disinterested directors who are not officers or employees of the Company or Sprint designees to the Company board, and who will not have an economic interest in
the Company or the surviving corporation following the completion of the merger, has determined that the merger is advisable, is substantively and procedurally fair to, and is in the best interests of our unaffiliated stockholders. The Special
Committee made its determination after consultation with its independent legal and financial advisors and consideration of a number of factors. Our board has also unanimously approved and declared advisable the Merger Agreement as amended by the
Amendment and resolved to recommend that the stockholders adopt the Merger Agreement as amended by the Amendment.
The
board of directors recommends that you vote FOR each of the proposals described in the proxy statement dated April 23, 2013, which we refer to as the proxy statement, as supplemented by this supplement to the proxy statement.
For your convenience, we have enclosed a revised proxy card with this supplement to the proxy statement. If you have
already voted for the Merger Agreement proposal using a properly executed WHITE proxy card or otherwise voted for the Merger Agreement proposal over the Internet or by telephone, you will be considered to have voted in favor of adoption of the
Merger Agreement, as amended, and do not need to do anything, unless you wish to revoke or change your vote. If you have not previously voted or if you wish to revoke or change your vote, please vote over the Internet or by telephone, or complete,
date, sign and return your WHITE proxy card as soon as possible. If you attend the Special Meeting and vote in person, your vote by ballot will revoke any proxy previously submitted.
The accompanying supplement to the proxy statement provides you with additional information
about the Special Meeting, the Merger Agreement, the Amendment and the merger. The information provided in the proxy statement continues to apply, except as described in this proxy statement supplement. To the extent information in this proxy
statement supplement differs from, updates or conflicts with information contained in the proxy statement, the information in this proxy statement supplement is the more current information and will supersede the information in the proxy statement.
A copy of the Amendment is attached as Annex S-A to the proxy statement supplement. We encourage you to carefully read the entire proxy statement supplement and its annexes, including the Amendment, as well as the original proxy statement and its
annexes and the Schedule 13E-3, including the exhibits attached thereto, filed by the Company, Sprint and certain of Sprints affiliates with the Securities and Exchange Commission. You may also obtain additional information about the Company
from other documents we have filed with the Securities and Exchange Commission.
If you have any questions or need assistance
voting your shares or revoking a prior proxy or desire another copy of the proxy statement or this proxy statement supplement, please contact our proxy solicitor, MacKenzie Partners, Inc. toll-free at (800) 322-2885, or collect at (212) 929-5500.
Thank you in advance for your cooperation and continued support.
Sincerely,
Erik Prusch
President and Chief Executive Officer
This proxy statement supplement is
dated May 22, 2013, and is first being mailed to the Companys stockholders on or about May 22, 2013.
NEITHER THE
SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THE MERGER, PASSED UPON THE MERITS OR FAIRNESS OF THE MERGER AGREEMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE MERGER, OR PASSED UPON
THE ADEQUACY OR ACCURACY OF THE INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To Be Held on May 31, 2013
Dear Stockholder:
You are cordially invited to attend a Special Meeting of the
stockholders of Clearwire Corporation, which we refer to as the Company or Clearwire, to be reconvened on May 31, 2013 (which has been adjourned from the special meeting originally convened on May 21, 2013), at 10:30 a.m., Pacific Daylight Time
at the Highland Center, 14224 Bel-Red Road, Bellevue, WA 98007, unless further adjourned by the Company, for the following purposes:
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To consider and vote on a proposal to adopt the Agreement and Plan of Merger, dated as of December 17, 2012, as amended from time to time, which we refer to as the
Merger Agreement, by and among Sprint Nextel Corporation, which we refer to as Sprint, Collie Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of Sprint, which we refer to as Merger Sub, and the Company, which we refer to as
the Merger Agreement Proposal. A copy of the Merger Agreement, as well as a previous amendment thereto, are attached as Annexes A-1 and A-2 to the proxy statement dated April 23, 2013 and a copy of a second amendment thereto increasing the per
share merger consideration payable to holders of Clearwires Class A common stock, par value $0.0001 per share, to $3.40 per share, without interest, less any applicable withholding taxes, is attached as Annex S-A to the accompanying proxy
statement supplement.
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To consider and vote on proposals to amend the Companys amended and restated certificate of incorporation, which we refer to as the Certificate of Incorporation,
to (a) increase the Companys authorized shares of Class A common stock, par value $0.0001 per share, which we refer to as Class A Common Stock, by 1,019,162,522 shares and (b) increase the Companys authorized shares
of Class B common stock, par value $0.0001 per share, which we refer to as Class B Common Stock, by 1,019,162,522 shares, which we refer to collectively as the Charter Amendment Proposal.
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To consider and vote on proposals to authorize the issuance of (a) the Class A Common Stock and (b) the Class B Common Stock that may be issued upon
(i) exchange of Clearwire Communications, LLCs and Clearwire Finance, Inc.s 1.00% Exchangeable Notes due 2018, which we refer to as the Notes, or (ii) with respect to the Class A Common Stock, upon exchange of the Class B
Interests (as defined below), issued upon exchange of the Notes in accordance with Rule 5635(d) of the NASDAQ Listing Rules, which we refer to collectively as the NASDAQ Authorization Proposal.
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To consider and vote on a proposal to adjourn the Special Meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the
time of the Special Meeting to approve the Merger Agreement Proposal, the Charter Amendment Proposal or the NASDAQ Authorization Proposal, which we refer to as the Adjournment Proposal.
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To approve, by non-binding, advisory vote, certain compensation arrangements for the Companys named executive officers in connection with the merger, which we
refer to as the Golden Parachute Proposal.
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To transact any other business that may properly come before the Special Meeting, or any adjournment or postponement of the Special Meeting, by or at the direction of
the board of directors of the Company.
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These items of business are more fully described in the proxy statement
supplement accompanying this notice and the proxy statement previously mailed to you.
The record date for the Special Meeting is April 2, 2013. Only stockholders of record
at the close of business on that date may vote at the Special Meeting or any adjournment or postponement thereof.
Your
vote is important. The board of directors unanimously recommends that you vote FOR the Merger Agreement Proposal, FOR the Charter Amendment Proposal, FOR the NASDAQ Authorization Proposal, FOR the
Adjournment Proposal and FOR the Golden Parachute Proposal.
We urge you to discard any gold proxy cards,
which were sent to you by a dissident stockholder. If you previously submitted a gold proxy card, we urge you to cast your vote as instructed in your WHITE proxy card, which will revoke any earlier dated proxy card that you submitted, including any
gold proxy card.
Submitting your proxy over the Internet or by telephone is fast and convenient, and your proxy is
immediately confirmed and tabulated. Using the Internet or telephone helps save the Company money by reducing postage and proxy tabulation costs.
For your convenience, we have enclosed a revised proxy card with this supplement to the proxy statement. If you have already voted for the Merger Agreement Proposal using a properly executed WHITE
proxy card or otherwise voted for the Merger Agreement Proposal over the Internet or by telephone, you will be considered to have voted in favor of adoption of the Merger Agreement, as amended, and do not need to do anything, unless you wish to
revoke or change your vote. If you have not previously voted or if you wish to revoke or change your vote, please vote over the Internet or by telephone, or complete, date, sign and return your WHITE proxy card as soon as possible. If you attend the
Special Meeting and vote in person, your vote by ballot will revoke any proxy previously submitted.
On Behalf of the Board of Directors,
Jillian Harrison
Corporate Secretary
Bellevue, Washington
Dated: May 22, 2013
TABLE OF CONTENTS
INTRODUCTION
This supplement to the proxy statement dated April 23, 2013, which we refer to as the proxy statement supplement, is being sent to
you because we have amended the Agreement and Plan of Merger, dated as of December 17, 2012, and amended as of April 18, 2013, by and among Sprint Nextel Corporation, Collie Acquisition Corp., a wholly-owned subsidiary of Sprint, and
Clearwire Corporation, which we refer to, as amended, as the Merger Agreement, and our stockholders are being asked to adopt the Merger Agreement, as amended, at a special meeting to be reconvened on May 31, 2013, at 10:30 a.m., Pacific
Daylight Time at the Highland Center, 14224 Bel-Red Road, Bellevue, WA 98007 unless further adjourned by the Company. In this proxy statement supplement, we refer to the merger of Collie Acquisition Corp. with and into Clearwire Corporation pursuant
to the Merger Agreement, as amended, as the Merger, and we refer to Sprint Nextel Corporation as Sprint, Collie Acquisition Corp., as Merger Sub, Clearwire Corporation as Clearwire, the Company, us, our or we.
On May 21, 2013, the Company, Sprint and Merger Sub entered into a second amendment to the Merger Agreement, which we refer to as
the Amendment. The effect of the Amendment is to increase the per share merger consideration payable to holders of Clearwires Class A common stock, par value $0.0001 per share, which we refer to as Class A Common Stock, (other than
shares held by Sprint, SoftBank Corp., which we refer to as SoftBank, or any of their respective affiliates) from $2.97 per share, without interest, less any applicable withholding taxes, to $3.40 per share, without interest, less any applicable
withholding taxes.
The board of directors of the Company, upon the recommendation of a special committee of the board
consisting of three independent and disinterested directors who are not officers or employees of the Company or Sprint designees to the Company board, and who will not have an economic interest in the Company or the surviving corporation following
the completion of the Merger, which we refer to as the Special Committee, has approved the Amendment and declared it advisable.
The board of directors of the Company continues to recommend that you vote as follows:
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FOR the proposal to adopt the Merger Agreement, which we refer to as the Merger Agreement Proposal;
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FOR the proposals to amend the Companys amended and restated certificate of incorporation to (a) increase the Companys authorized shares of
Class A Common Stock by 1,019,162,522 shares and (b) increase the Companys authorized shares of Class B common stock, par value $0.0001 per share, which we refer to as Class B Common Stock and together with our Class A Common
Stock as Common Stock, by 1,019,162,522 shares, which we refer to collectively as the Charter Amendment Proposal;
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FOR the proposals to authorize the issuance of (a) the Class A Common Stock and (b) the Class B Common Stock that may be issued upon
(i) exchange of Clearwire Communications, LLCs and Clearwire Finance, Inc.s 1.00% Exchangeable Notes due 2018, which we refer to as the Notes, or (ii) with respect to the Class A Common Stock, upon exchange of the Class B
Interests (as defined in the proxy statement), issued upon exchange of the Notes in accordance with Rule 5635(d) of the NASDAQ Listing Rules, which we refer to collectively as the NASDAQ Authorization Proposal;
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FOR the proposal to adjourn the Special Meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of
the Special Meeting to approve the Merger Agreement Proposal, the Charter Amendment Proposal or the NASDAQ Authorization Proposal, which we refer to as the Adjournment Proposal; and
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FOR the non-binding proposal regarding certain compensation arrangements for the Companys named executive officers in connection with the Merger,
which we refer to as the Golden Parachute Proposal.
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These proposals are more fully described in the proxy statement dated April 23, 2013 and previously
mailed to you on or about April 23, 2013, which we refer to in this proxy statement supplement as the proxy statement.
This proxy statement supplement provides information about the Amendment and updates the proxy statement. The information provided in the
proxy statement continues to apply, except as described in this proxy statement supplement. To the extent information in this proxy statement supplement differs from, updates or conflicts with information contained in the proxy statement, the
information in this proxy statement supplement is the more current information and will supersede the information in the proxy statement. If you need another copy of the proxy statement or this proxy statement supplement, you may request copies of
the proxy statement or this proxy statement supplement, without charge, by written or telephonic request directed to Clearwire Corporation, Attn: Investor Relations, 1475 120th Avenue Northeast Bellevue, Washington 98005, Telephone:
(425) 636-5828; or from our proxy solicitor, MacKenzie Partners, Inc. toll-free at (800) 322-2885, or collect at (212) 929-5500.
The proxy statement and this proxy statement supplement may also be accessed at the Securities and Exchange Commission, which we refer to as the SEC, website at www.sec.gov or on the Investor
Relations page of our corporate website at www.clearwire.com. The information provided on our website is not part of this proxy statement supplement or the proxy statement and is not incorporated in this proxy statement supplement or the proxy
statement by this or any other reference to our website provided in this proxy statement supplement or the proxy statement. See Where You Can Find More Information, beginning on page S-45 of this proxy statement supplement.
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QUESTIONS AND ANSWERS ABOUT THE AMENDMENT TO THE MERGER
AGREEMENT
The following questions and answers are intended to address briefly some commonly asked questions regarding the Amendment.
These questions and answers may not address all questions that may be important to you as a stockholder of the Company. Please refer to the remainder of this proxy statement supplement, the annexes to this proxy statement supplement, and, if you
have not already done so, the proxy statement and the documents referred to in the proxy statement, all of which you should read carefully. See Where You Can Find More Information.
The following information supplements and, where applicable, replaces the corresponding questions and answers under the heading Questions and
Answers About the Special Meeting and the Merger beginning on page 96 of the proxy statement.
Q: Why am I receiving this proxy
statement supplement and a new proxy card?
A: You have been sent this proxy statement supplement and a new proxy card because on
May 21, 2013, the Company, Sprint and Merger Sub entered into the Amendment. This proxy statement supplement provides information about the Amendment and updates the proxy statement.
Q: What is the effect of the Amendment?
A: The effect of the Amendment is to increase the
per share merger consideration, which we refer to as the Merger Consideration, payable to holders of our Class A Common Stock (other than Sprint, SoftBank, and any of their respective affiliates) from $2.97 per share, without interest, less any
applicable withholding tax, to $3.40 per share, without interest, less any applicable withholding tax. A copy of the Amendment is attached as Annex S-A hereto. We encourage you to read the Amendment and this proxy statement supplement in their
entirety, and if you have not already done so, to read the proxy statement in its entirety.
Q: Has the transaction otherwise changed?
A: No. Other than as set forth in the Amendment, the terms of the transaction have not changed. The proposed transaction is the
acquisition by Sprint of all of the Companys Common Stock that Sprint and its affiliates do not already own, pursuant to the Merger Agreement. If the Merger Agreement Proposal is approved by our stockholders and the other closing conditions
under the Merger Agreement have been satisfied or waived, Merger Sub, a wholly-owned subsidiary of Sprint, will merge with and into the Company and the Company will continue as the surviving corporation. We refer to this transaction as the Merger.
As a result of the Merger, the Company will become a wholly-owned subsidiary of Sprint and will no longer be a publicly-held corporation. In addition, as a result of the Merger, our Class A Common Stock will be delisted from NASDAQ and
deregistered under the Securities Exchange Act of 1934, as amended, we will no longer file periodic reports with the SEC on account of our Class A Common Stock, and you will no longer have any interest in our future earnings or growth.
In connection with the Merger Agreement, Clearwire, Clearwire Communications, LLC and Clearwire Finance, Inc. also entered into the Note
Purchase Agreement, dated as of December 17, 2012 (as amended on January 31, 2013 and February 26, 2013), with Sprint, pursuant to which Sprint has agreed to purchase the Notes from us at our request, but subject to the conditions set
forth in the Note Purchase Agreement. In order to allow Clearwire to request the full remaining amount of available financing provided by Sprint pursuant to the Note Purchase Agreement, you will also be asked to approve the Charter Amendment
Proposal and the NASDAQ Authorization Proposal.
Q: What will I receive if the Merger is completed?
A: Upon completion of the Merger, you will be entitled to receive the Merger Consideration for each share of our Class A Common Stock that you own,
unless you properly exercise, and do not withdraw, your appraisal rights
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under the General Corporation Law of the State of Delaware, with respect to such shares. For example, if you own 100 shares of our Class A Common Stock, you will receive $340 in cash in
exchange for your 100 shares of our Class A Common Stock, less any applicable withholding taxes. Upon consummation of the Merger, you will not own any shares of the capital stock of the surviving corporation.
Q: How does the Merger Consideration compare to the market price of the Companys Class A Common Stock prior to the announcement of the
Merger?
A: The Merger Consideration represents approximately a 161.5% premium to the closing share price of the Companys
Class A Common Stock the day before discussions between Sprint and SoftBank were first confirmed in the marketplace on October 11, 2012, with Clearwire speculated to be a part of that transaction; and, approximately a 60.4% premium to the
closing price the day before our receipt of Sprints initial $2.60 per share non-binding indication of interest on November 21, 2012.
Q: Has the board of directors approved the Amendment?
A: Yes, the board of directors of the Company, upon the recommendation of the Special Committee, has unanimously approved the Amendment and declared it advisable.
Q: Did the Special Committee receive an updated fairness opinion from its financial advisor?
A: Yes, on May 21, 2013, Centerview Partners LLC, which we refer to as Centerview, delivered to the Special Committee an updated fairness opinion to
the effect that, as of May 21, 2013, and based upon and subject to the various assumptions and limitations set forth in the fairness opinion, the Merger Consideration to be paid to the holders of our Class A Common Stock (other than
affiliates of the Company) pursuant to the Merger Agreement, as amended by the Amendment, was fair, from a financial point of view, to such holders.
Q: Did the board of directors receive an updated fairness opinion from its financial advisor?
A: Yes, on May 21, 2013, Evercore Group, L.L.C., which we refer to as Evercore, delivered to the board of directors an updated fairness opinion to the effect that, as of May 21, 2013, as of that
date and based upon and subject to assumptions made, matters considered and limitations on the scope of review undertaken by Evercore as set forth in its opinion, the Merger Consideration to be paid to the holders of shares of Class A Common
Stock (other than affiliates of the Company) pursuant to the Merger was fair, from a financial point of view, to such holders.
Q: When and
where is the Special Meeting?
A: The Special Meeting of stockholders of the Company will be reconvened on May 31, 2013, at
10:30 a.m., Pacific Daylight Time at the Highland Center unless further adjourned by the Company.
Q How does the board of directors
recommend that I vote?
A: The board of directors continues to unanimously recommend that you vote FOR the Merger Agreement
Proposal, FOR the Charter Amendment Proposal, FOR the NASDAQ Authorization Proposal, FOR the Adjournment Proposal, and FOR the Golden Parachute Proposal.
Approval of the proposal to adopt the Merger Agreement is
independent
of approval of the Charter Amendment Proposal, and each of these approvals
is also
independent
of approval of the NASDAQ Authorization Proposal.
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Q: Who can vote at the Special Meeting?
A: Stockholders of record as of the close of business on April 2, 2013, the record date for the Special Meeting, which we refer to as the Record Date, are entitled to receive notice of, and to vote
at, the Special Meeting. Each record holder of shares of our Common Stock as of the Record Date is entitled to cast one vote on each matter properly brought before the Special Meeting for each share of Common Stock that such holder owns as of the
Record Date.
Q: How do I vote?
A: If you were a stockholder of record as of the Record Date, you may vote your shares on matters presented at the Special Meeting in any of the following ways:
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in personyou may attend the Special Meeting and cast your vote there;
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by proxystockholders of record have a choice of voting by proxy:
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over the Internet (the website address for Internet voting is printed on your WHITE proxy card);
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by using the toll-free telephone number noted on your WHITE proxy card; or
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by signing, dating and returning the enclosed WHITE proxy card in the accompanying prepaid reply envelope.
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If you are a beneficial owner of shares of our Common Stock as of the Record Date, please refer to the instructions provided by your bank, brokerage firm
or other nominee to see which of the above choices are available to you. Please note that if you are a beneficial owner and wish to vote in person at the Special Meeting, you must have a legal proxy from your bank, brokerage firm or other nominee.
The control number located on your WHITE proxy card is designed to verify your identity and allow you to vote your shares of our Common
Stock, and to confirm that your voting instructions have been properly recorded when submitting a proxy over the Internet or by telephone.
Please note that if you attend the Special Meeting in person, cameras, recording devices, cell phones and certain other electronic devices will not be
permitted at the Special Meeting.
Q: What if I submitted my vote using a gold proxy card?
A: If you previously submitted your vote using a gold proxy card, we encourage you to cast your vote using the WHITE proxy card, which will revoke your
vote on the gold proxy card, at any time prior to the vote on the matters at the Special Meeting or, if the Special Meeting is continued, adjourned or postponed, the date and time of such continued, adjourned or postponed meeting.
Q: Why is my vote important? What happens if I do not vote?
A: If you fail to vote, either in person or by proxy, or fail to instruct your bank, broker or other nominee as to how to vote, it will have the same effect as a vote cast against the Merger Agreement
Proposal, the Charter Amendment Proposal and the NASDAQ Authorization Proposal.
If you fail to vote, either in person or by proxy, or fail to
instruct your bank, broker or other nominee as to how to vote, it will not have any effect on the Adjournment Proposal or the Golden Parachute Proposal.
If you abstain from voting it will have the same effect as a vote cast against all the proposals.
S-5
Q: Can I change or revoke my vote?
A: Yes. You have the right to revoke a proxy, including any proxy you may have given by submitting a gold proxy card, whether delivered over the Internet, by telephone or by mail, at any time before it is
exercised, by submitting another proxy, including a WHITE proxy card, at a later date through any of the methods available to you, by giving written notice of revocation to our Corporate Secretary, which must be filed with our Corporate Secretary by
the time the Special Meeting begins, or by attending the Special Meeting and voting in person. If your shares of our Common Stock are held in street name by your bank, broker or other nominee, please refer to the information forwarded by your bank,
broker or other nominee for procedures on changing or revoking your proxy.
Only your last submitted proxy card will be considered. Please
cast your vote FOR each of the proposals, following the instructions in your WHITE proxy card, as promptly as possible. You do not need to contact the dissident stockholder to revoke any previously granted proxy you may have given by
submitting a gold proxy card. Your submission of your vote via the instructions in your WHITE proxy card is sufficient to revoke your gold proxy card.
Q: What do I need to do now?
A: We encourage you to carefully read the entire proxy
statement supplement and its annexes, including the Amendment, as well as the proxy statement and its annexes and the Schedule 13E-3, including the exhibits attached thereto, filed by the Company, Sprint and certain of Sprints affiliates with
the SEC. You may also obtain additional information about the Company from other documents we have filed with the SEC.
If you have not
previously voted or if you wish to revoke or change your vote, even if you plan to attend the Special Meeting, after carefully reading and considering the information contained in this proxy statement supplement, please submit your proxy promptly to
ensure that your shares are represented at the Special Meeting. If you hold your shares of our Common Stock in your own name as the stockholder of record, please submit your proxy for your shares of our Common Stock by completing, signing, dating
and returning the enclosed proxy card in the accompanying prepaid reply envelope, by using the telephone number printed on your proxy card or by following the Internet proxy instructions printed on your proxy card. If you decide to attend the
Special Meeting and vote in person, your vote by ballot at the Special Meeting will revoke any proxy previously submitted. If you are a beneficial owner of shares of our Common Stock, please refer to the instructions provided by your bank, brokerage
firm or other nominee to see which of the above choices are available to you.
Q: What should I do if I have already voted?
If you already have voted for the Merger Agreement Proposal using a properly executed WHITE proxy card or otherwise voted for the Merger Agreement
Proposal over the Internet or by telephone, you will be considered to have voted in favor of adoption of the Merger Agreement and do not need to do anything, unless you wish to revoke or change your vote.
Q. Who can help answer my other questions?
A. If you have additional questions about the Merger, need assistance in submitting your proxy or voting your shares of our Common Stock, or need additional copies of the proxy statement or the enclosed
WHITE proxy card, please contact:
MacKenzie Partners, Inc.
105 Madison Avenue
New York, New York 10016
Call toll-free: (800) 322-2885
or
Call collect: (212) 929-5500
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SUPPLEMENT TO PROXY STATEMENT
The following information replaces or supplements the information in the specified sections of the proxy statement. The page references listed below
are references to pages in the proxy statement, not this proxy statement supplement.
The references to the Merger
Agreement throughout the proxy statement are revised to refer to the Merger Agreement as amended by the Amendment.
The
references to the Merger Agreement, as well as an amendment thereto, which are attached as Annexes A-1 and A-2 to the proxy statement throughout the proxy statement are replaced with references to the Merger Agreement, as well as
the amendments thereto, which are attached as Annexes A-1, A-2 and S-A to the proxy statement.
The Amendment, attached as Annex
S-A hereto, the opinion of Centerview dated as of May 21, 2013, attached as Annex S-J hereto, and the opinion of Evercore dated as of May 21, 2013, attached as Annex S-K hereto, are each incorporated as annexes to the proxy statement.
SUMMARY TERM SHEET
The following information replaces or supplements the information under the heading Summary Term Sheet beginning on page 1 of the proxy statement.
Special Factors
The following
information replaces the third bullet point on page 3 of the proxy statement.
Opinion of Financial Advisor to the Special Committee
(page 50).
In connection with the Special Committees analysis and consideration of potential strategic alternatives, including the Merger, on November 21, 2012, the Special Committee retained Centerview Partners LLC, which we
refer to as Centerview, to act as its financial advisor. On May 21, 2013, Centerview delivered to the Special Committee and the Audit Committee its oral opinion, which was subsequently confirmed by delivery of a written opinion, dated
May 21, 2013, to the effect that, as of that date and based upon and subject to the various assumptions and limitations set forth in the written opinion, the merger consideration of $3.40 in cash per share, without interest, less any applicable
withholding taxes, which amount we refer to as the Merger Consideration, to be paid to the holders of our Class A Common Stock (other than affiliates of the Company) pursuant to the Merger Agreement was fair, from a financial point of view, to
such holders, as more fully described in Special FactorsOpinion of Financial Advisor to the Special Committee.
The full
text of the written opinion of Centerview, dated May 21, 2013, which sets forth, among other things, the assumptions made, procedures followed, matters considered and limitations on the review undertaken by Centerview in connection with its
opinion, is attached as Annex S-J to this proxy statement and is incorporated by reference herein in its entirety. Centerview provided its opinion for the information and assistance of the Special Committee and the Audit Committee in connection
with, and for purposes of, their consideration of the Merger and its opinion only addresses whether, as of the date of such written opinion, the Merger Consideration to be paid to the holders of our Class A Common Stock (other than affiliates
of the Company) pursuant to the Merger Agreement was fair, from a financial point of view, to such holders and does not address any other term or aspect of the Merger Agreement or the Merger contemplated thereby. Centerviews opinion does not
address the relative merits of the Merger as compared to other business strategies or transactions that might be available with respect to the Company or the Companys underlying business decision to effect the Merger or any related
transaction. The opinion does not constitute a recommendation to any stockholder of the Company as to how
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such stockholder should vote or otherwise act with respect to the Merger or any other matter. For a further discussion of Centerviews opinion, see Special FactorsOpinion of
Financial Advisor to the Special Committee.
The following information replaces the last bullet point on page 3 of the proxy
statement.
Opinion of Financial Advisor to the Board of Directors (page 62)
. In connection with Clearwires board of
directors analysis and consideration of potential strategic alternatives, including the Merger, on December 7, 2012, Clearwires board of directors retained Evercore Group, L.L.C., which we refer to as Evercore, to act as financial
advisor to Clearwires board of directors. On May 21, 2013, at a meeting of Clearwires board of directors, Evercore delivered its oral opinion to Clearwires board of directors, which opinion was subsequently confirmed by
delivery of a written opinion, dated May 21, 2013, to the effect that, as of that date and based upon and subject to assumptions made, matters considered and limitations on the scope of review undertaken by Evercore as set forth in its opinion,
the Merger Consideration to be paid to the holders of shares of Class A Common Stock (other than affiliates of the Company) pursuant to the Merger was fair, from a financial point of view, to such holders, as more fully described under the
heading Special FactorsOpinion of Financial Advisor to the Board of Directors.
The full text of Evercores written opinion, which sets forth, among other things, the procedures followed, assumptions made, matters considered
and limitations on the scope of review undertaken in rendering its opinion, is attached to this proxy statement as Annex S-K and incorporated herein by reference. Evercores opinion was directed to Clearwires board of directors and
addresses only, as of the date of such opinion, the fairness, from a financial point of view, of the Merger Consideration to be paid to holders of Class A Common Stock (other than affiliates of the Company). The opinion does not address any
other aspect of the proposed Merger and does not constitute a recommendation to Clearwires board of directors or to any other persons in respect of the Merger, including to any Clearwire shareholder as to how they should vote or act in respect
of the Merger.
The following information replaces the last bullet point on page 5 of the proxy statement.
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Financing of the Merger (page 90).
The receipt of financing by Sprint to consummate the Merger is not a condition to the obligations of either
party to complete the Merger under the terms of the Merger Agreement. See Special FactorsFinancing of the Merger. We anticipate that the total funds needed to complete the Merger will be approximately $2.6 billion. Sprint has
informed us that it expects to fund this amount through cash on hand.
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The Special Meeting
The following information replaces the first paragraph in the first bullet point on page 10.
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Time, Place and Purpose of the Special Meeting (page 136). The Special Meeting will be reconvened on May 31, 2013, starting at 10:30 a.m., Pacific
Daylight Time at the Highland Center unless further adjourned by the Company.
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The following information replaces the
second paragraph in the third bullet point on page 12.
On May 21, 2013, the most recent practicable date before the
proxy statement supplement was mailed to our stockholders, the closing price for our Class A Common Stock on NASDAQ was $3.40 per share. You are encouraged to obtain current market quotations for our Class A Common Stock in connection with
voting your shares of Class A Common Stock.
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SPECIAL FACTORS
The following information replaces or supplements the information under the heading Special Factors beginning on page 14 of the proxy
statement.
The references to $2.97 in the Special Factors in the second paragraph on page 14 and the last bullet point on
page 45 of the proxy statement are replaced with a reference to $3.40.
Background of the Merger
The section of the Special Factors titled Background of the Merger beginning on page 14 of the proxy statement describes the background of
the transaction up to and including April 22, 2013. The discussion below supplements that description up to and including the date of this supplement. For litigation developments subsequent to the date of the proxy statement, see
Litigation Related to the Merger.
On April 23, 2013, Clearwire began mailing to its stockholders of
record as of the close of business on the record date a definitive proxy statement relating to a special meeting of its stockholders to take place on Tuesday, May 21, 2013. Following the mailing of the definitive proxy statement, Clearwire and
its representatives began contacting and attending in person meetings with Clearwire stockholders to solicit proxies in favor of the proposals.
During May 2013, a number of Clearwires minority stockholders made public statements and filings in opposition to the Merger. Crest Financial Limited, in particular, actively solicited proxies in
opposition to the Merger.
On May 6, 2013 and May 13, 2013, respectively, Clearwire issued public statements and
letters to its stockholders recommending that Clearwire stockholders vote for the proposed merger with Sprint, highlighting the significant benefits to Clearwire stockholders of the proposed merger and addressing statements by Crest Financial
Limited regarding the proposed merger with which Clearwire disagreed.
On May 10, 2013, Institutional Shareholder
Services Inc., an independent U.S. proxy advisory firm, recommended that Clearwires stockholders vote for the proposals. Also on May 10, 2013, Glass Lewis & Co., another independent U.S. proxy advisory firm, recommended that
Clearwire stockholders vote against the proposals. Both of their recommendations were made prior to the parties entering into the amendment.
On the evening of May 20, 2013, Mr. Stanton received a call from Mr. Hesse during which call Mr. Hesse stated that Sprints board of directors had authorized an increase in the
merger consideration from $2.97 per share without interest to $3.40 per share without interest. Mr. Hesse further stated that this represented Sprints best and final offer to Clearwires unaffiliated stockholders.
Later on May 20, 2013, Sprint delivered to the Clearwire board of directors a proposal for amending the Merger Agreement to increase
the merger consideration payable to unaffiliated holders of Clearwires Class A Common Stock from $2.97 per share, without interest, to $3.40 per share, without interest. The Sprint proposal further stated that the revised offer was
conditioned on the Company holding the adjourned Special Meeting of stockholders on May 29, 2013 or May 30, 2013.
On the morning of May 21, 2013, the Special Committee met via telephone to consider the terms of the amendment. Representatives of
Clearwire management, Centerview, Evercore, Simpson Thacher, Richards Layton and Kirkland & Ellis attended the meeting. The Special Committee discussed the Sprint amendment. Kirkland & Ellis and Simpson Thacher reviewed the
material terms of the amendment. Representatives of
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Centerview reviewed certain financial analyses of the revised offer and, after discussion, delivered Centerviews opinion to the Special Committee and the Audit Committee to the effect that,
as of May 21, 2013, and based upon and subject to the various assumptions and limitations set forth in Centerviews written opinion, the revised Merger Consideration of $3.40 per share without interest to be paid to the holders of shares
of Class A Common Stock (other than affiliates of the Company) was fair, from a financial point of view, to such holders. Following this report, representatives of Simpson Thacher reminded the Special Committee of its fiduciary duties in
considering the amendment. The members of the Special Committee then discussed the terms of the amendment relating to the requirements around holding the Special Meeting. The members of the Special Committee confirmed that they were supportive of
the proposed amendment subject to the provisions of the Merger Agreement governing the circumstances under which the Special Meeting could be delayed not being modified other than to reconvene the originally scheduled Special Meeting on May 31,
2013.
On May 21, 2013, in light of the revised offer, Clearwire adjourned the Special Meeting of stockholders, which was
opened and closed without conducting any business. The Company announced at the Special Meeting of stockholders that it will reconvene, as provided for in the amendment, the Special Meeting on Friday, May 31, 2013.
Following the Special Committee meeting, representatives of Kirkland & Ellis discussed the requested changes to the terms of the
amendment with representatives of Skadden and Sprint subsequently agreed to the changes to the terms of the amendment requested by the Special Committee.
Prior to the meetings described below, Mr. Hersch spoke to Mr. Schell regarding the revised terms of the amendment and Mr. Schell, who was unable to attend the board meeting described
below, indicated his support for the amendment.
As of May 21, 2013, the Company and DISH had not had any substantive
discussions since DISH had made an unsolicited offer to acquire Sprint on April 15, 2013, and the Company did not believe that DISH was likely to offer a higher price for the Companys Class A Common Stock than the $3.40 per share
without interest that Sprint had offered.
Later in the day on May 21, 2013, the Clearwire board of directors met in a
joint session with the Special Committee and the Audit Committee. Representatives of Clearwire management, Evercore, Centerview, Kirkland & Ellis, Simpson Thacher and Richards Layton attended the meeting. Kirkland & Ellis reviewed
the material terms of the amendment, including the changes that had been agreed upon to make the terms of the amendment regarding the holding of the Special Meeting consistent with the existing terms of the merger agreement. Mr. Hersch
summarized for the Board, the Special Committees meeting that occurred earlier in the day and the fairness opinion presented to the Special Committee by Centerview. Following additional discussions, the Special Committee determined that, among
other things, (i) the revised Merger Agreement and the transactions contemplated thereby, including the merger, when compared with other potential transactions reasonably available to the Company at that time, was the most favorable potential
transaction to the Companys unaffiliated stockholders, (ii) the terms of the revised Merger Agreement and the merger were advisable, fair to and in the best interest of the Companys unaffiliated stockholders, (iii) the Special
Committee recommended that the Companys board of directors approve the revised Merger Agreement and (iv) the Special Committee recommended that the Companys board of directors declare the advisability of the revised Merger Agreement
to the Companys stockholders and recommend the adoption of the revised Merger Agreement by the Companys stockholders; and the Audit Committee adopted resolutions to the effect that, among other things, (A) the revised Merger
Agreement and the transactions contemplated thereby, including the Merger, were advisable, fair to and in the best interest of the Company and its stockholders, (B) the revised Merger Agreement and the transactions contemplated thereby, was
approved for all purposes of the Audit Committee Charter and the Equityholders Agreement, and (C) the Audit Committee recommended that the Companys board of directors declare the advisability of the revised Merger Agreement to the
Companys stockholders and recommend the adoption of the revised Merger Agreement by the Companys stockholders. A discussion then ensued regarding the events leading up to Sprints revised offer. Mr. Stanton noted for the board
of directors that discussions with DISH had
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not resulted in receipt of an actionable proposal. He also noted that the Company had not received an actionable proposal in connection with Verizons preliminary indication of interest in
buying approximately 5 billion MHz-POPs of spectrum leases located in the Companys top 25 largest markets for a gross price of approximately $1.0 to $1.5 billion, less the present value of the spectrum leases, which the board of
directors had been previously informed would only yield after-tax net proceeds to the Company of between approximately $550 million and $850 million. Following this discussion, representatives of Evercore reviewed certain financial analyses of
the revised offer and, after discussion, delivered Evercores opinion that, as of May 21, 2013, and based upon and subject to the assumptions made, matters considered and limitations on the scope of review undertaken by Evercore as set
forth in its written opinion, the revised Merger Consideration to be paid to the unaffiliated holders of shares of Class A Common Stock pursuant to the Merger was fair, from a financial point of view, to such holders. Following the receipt of
Evercores opinion and the recommendation of the Special Committee, the two members of the Audit Committee present approved the revised Merger Agreement and recommended it be submitted to the Companys stockholders for adoption. Next, the
six directors who are disinterested and not designated by Sprint on the Companys board of directors unanimously approved the revised Merger Agreement and the transactions contemplated thereby, including the Merger. Following the action of the
six directors who are disinterested and not designated by Sprint, the Companys board of directors unanimously determined by the directors present and voting that, among other things, (i) the revised Merger Agreement, and the Merger and
the other transactions contemplated thereby, are advisable, fair to and in the best interests of the Company and its stockholders, (ii) the revised Merger Agreement is authorized and approved for all purposes by the Companys board of
directors or any subset of the directors on the Companys board of directors as may be required under the Equityholders Agreement, (iii) the adoption of the revised Merger Agreement, be submitted to the Companys stockholders
for consideration, and (iv) recommended that the stockholders of the Company vote their shares of Common Stock in favor of the adoption of the revised Merger Agreement.
On May 21, 2013, following the approval of the Clearwire board of directors, the parties executed and delivered the amendment.
On May 22, 2013, the Company issued a press release stating that the Companys board of directors had approved the Amendment
and recommended that the Companys stockholders vote in favor of adopting the revised Merger Agreement at the Special Meeting to be reconvened on May 31, 2013.
Recommendation of the Special Committee and the Board of Directors; Fairness of the Merger
The following information replaces the first sentence on page 40 of the proxy statement.
Pursuant to resolutions of the Special Committee, dated December 16, 2012, adopted at a meeting of the Special Committee held on
December 16, 2012, and additional resolutions of the Special Committee, dated May 21, 2013, adopted at a meeting of the Special Committee held on May 21, 2013, the Special Committee determined that the terms of the Merger Agreement
and the transactions contemplated by the Merger Agreement, including the Merger, were advisable, fair to and in the best interest of the holders of Class A Common Stock (other than affiliates of the Company) and the Special Committee
recommended that the Clearwire board of directors (i) approve the Merger Agreement, the agreements related thereto and the transactions contemplated thereby, including the Merger, (ii) declare the advisability of the Merger Agreement to
the stockholders of Clearwire and (iii) recommend the adoption of the Merger Agreement by the stockholders of Clearwire.
The
following information replaces the second to last bullet point on page 40 of the proxy statement.
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the fact that the Merger Consideration represents (i) an approximately 60.4% premium to the closing price of our Common Stock on November 20,
2012, the trading day immediately prior to the date of the receipt of the initial non-binding offer from Sprint of $2.60 per share and (ii) an approximately 161.5% premium to the closing price of our Common Stock on October 10, 2012, the
trading day immediately prior to the date discussions between Sprint and SoftBank were first confirmed in the marketplace, with Clearwire speculated to be a part of the transaction.
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The following information replaces the last bullet point on page 41 of the proxy statement.
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the oral opinion of Centerview rendered at a joint meeting of the Special Committee and the Audit Committee on May 21, 2013, which was
subsequently confirmed by delivery of a written opinion, dated May 21, 2013, to the Special Committee and the Audit Committee, to the effect that, as of that date and based upon and subject to the various assumptions and limitations set forth
in the written opinion, the Merger Consideration to be paid to the holders of Class A Common Stock (other than affiliates of the Company) pursuant to the Merger Agreement was fair, from a financial point of view, to such holders, as more fully
described under Opinion of Financial Advisor to the Special Committee;
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The following information
replaces the first and second bullet point on page 42 of the proxy statement.
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the presentation of Centerview in support of its opinion presented to the Special Committee at the May 21, 2013 meeting of the Special Committee
as more fully described under Opinion of Financial Advisor to the Special Committee;
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the presentations made by Centerview at multiple meetings of the Special Committee prior to the May 21, 2013 meeting of the Special Committee with
respect to Centerviews view of the possible strategic alternatives available to the Company, including the restructuring alternative and the Preliminary 2012 DISH Proposal, in each case which Centerview noted did not appear to be equally
attractive alternatives to the final Sprint transaction, including for the reasons described above;
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The following
information replaces the fourth bullet point on page 42 of the proxy statement.
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the fact that under the Merger Agreement the public stockholders of Clearwire will receive (i) a higher per share consideration than the $2.26 per
share that Google received for its Common Stock on March 1, 2012 and (ii) a higher per share consideration than the $1.37 per share that Time Warner received for its Common Stock on October 3, 2012;
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The following information replaces the seventh bullet point on page 42 of the proxy statement.
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the fact that Sprint confirmed in its offer letter on May 20, 2013 that the revised merger consideration of $3.40 per share was its best and final
offer;
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The following information replaces the fifth bullet point on page 45 of the proxy statement.
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the fact that the Special Committee received an oral opinion rendered at the Special Committee meeting on May 21, 2013, which was subsequently
confirmed by delivery of a written opinion, dated May 21, 2013, to the Special Committee and the Audit Committee, to the effect that, as of that date and based upon and subject to the various assumptions and limitations set forth in the written
opinion, the Merger Consideration to be paid to the holders of Class A Common Stock (other than affiliates of the Company) pursuant to the Merger Agreement was fair, from a financial point of view, to such holders, as more fully described under
Opinion of Financial Advisor to the Special Committee;
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Position of Sprint Parties Regarding the
Fairness of the Merger
The following information replaces the first, second, third, fifth and sixth bullet points on page 47 of the
proxy statement.
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the Merger Consideration represents approximately a 161.5% premium to the closing share price of the Companys Class A Common Stock the day
before discussions between Sprint and SoftBank were first confirmed in the marketplace on October 11, 2012, with Clearwire speculated to be a part of that transaction; and, approximately a 60.4% premium to the closing price the day before the
Companys receipt of Sprints initial $2.60 per share non-binding indication of interest on November 21, 2012;
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the Merger Consideration represents approximately a 30.8% premium to Sprints initial $2.60 per share non-binding indication of interest;
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the price of $0.24 per MHz-POP for the Companys spectrum portfolio, including owned and leased spectrum, is consistent with historical precedents
for similar spectrum assets;
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the fact that another significant stockholder of the Company, Eagle River agreed to a blended price of $2.97 per share (plus, subject to certain
conditions, additional consideration to the extent Sprint, as purchaser of the Eagle River Common Stock, later acquired Common Stock for a higher price) for the sale of its Class A Common Stock and Class B Common Stock in October 2012 after Sprint
confirmed its discussions with SoftBank;
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the fact that Comcast, Bright House and Intel, who collectively own approximately 13% of the Companys voting shares or approximately 26% of the
non-Sprint voting shares, have agreed to vote their shares in favor of the Merger Agreement Proposal, and in certain circumstances where the Merger Agreement Proposal is not approved by the Companys stockholders, to offer to sell their equity
securities in the Company and Clearwire Communications to the other equityholders (including Sprint) at a price equal to the Merger Consideration for each share, as described in The Voting and Support Agreement and The Agreement
Regarding Right of First Offer;
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The following information replaces the fifth bullet on page 48 of the proxy
statement.
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although consummation of the Merger is conditioned on prior consummation of the Sprint-SoftBank Merger, Sprint believes the consummation of the
Sprint-SoftBank Merger is likely to occur by mid-2013, subject to the outcome of the Sprint board and special committee process established by Sprint to consider the unsolicited acquisition proposal received by Sprint from DISH.
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Opinion of Financial Advisor to the Special Committee
The following information supplements the section of the Special Factors titled Opinion of Financial Advisor to the Special Committee on page 50 of the proxy statement.
In connection with the Special Committees analysis and consideration of potential strategic alternatives, including the Merger, on
November 21, 2012, the Special Committee retained Centerview to act as its financial advisor. On May 21, 2013, Centerview delivered to the Special Committee and the Audit Committee its oral opinion, which was subsequently confirmed by
delivery of a written opinion, dated May 21, 2013, to the effect that, as of that date and based upon and subject to the various assumptions and limitations set forth in the written opinion, the Merger Consideration to be paid to the holders of
our Class A Common Stock (other than affiliates of the Company) pursuant to the Merger Agreement was fair, from a financial point of view, to such holders.
The full text of the written opinion of Centerview, dated May 21, 2013, which sets forth, among other things, the assumptions made, procedures followed, matters considered and limitations on the
review undertaken by Centerview in connection with its opinion, is attached as Annex S-J to this proxy statement and is incorporated by reference herein in its entirety. Centerview provided its opinion for the information and assistance of the
Special Committee and the Audit Committee in connection with, and for purposes of, their consideration of the Merger and its opinion only addresses whether, as of the date of such written opinion, the Merger Consideration to be paid to the holders
of our Class A Common Stock (other than affiliates of the Company) pursuant to the Merger Agreement was fair, from a financial point of view, to such holders and does not address any other term or aspect of the Merger Agreement or the Merger
contemplated thereby. Centerviews opinion does not address the relative merits of the Merger as compared to other business strategies or transactions that might be available with respect to the Company or the Companys underlying business
decision to effect the Merger or any related transaction. The opinion does not constitute a recommendation to any stockholder of the Company as to how such stockholder should vote or otherwise act with respect to the Merger or any other matter. The
summary of the written opinion of Centerview set forth below is qualified in its entirety by reference to the full text of such written opinion.
We encourage you to carefully read the written opinion of Centerview described above in its entirety for a description of the assumptions made, procedures followed, matters considered and limitations
on the review undertaken by Centerview in connection with such opinion.
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Summary of Centerviews Opinion
In connection with rendering its opinion and performing its related financial analyses, Centerview reviewed, among other things:
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the Merger Agreement (including a draft dated May 20, 2013 of the Amendment) and certain documents related to the issuance of Clearwire
Communications and Clearwire Finances 1.00% Exchangeable Notes due 2018;
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the Annual Reports on Form 10-K of the Company for the years ended December 31, 2009, 2010, 2011 and 2012;
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certain interim reports to stockholders, including Quarterly Reports on Form 10-Q of the Company;
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certain publicly available research analyst reports for the Company;
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certain other communications from the Company to its stockholders; and
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certain internal information relating to the business, operations, earnings, cash flow, assets, liabilities and prospects of the Company furnished to
Centerview by the Company, including certain financial forecasts, analyses and projections relating to the Company prepared by management of the Company (including the Single-Customer Case and the Multi-Customer Case more fully described below under
Prospective Financial Information) and furnished to Centerview by the Company, which Centerview refers to collectively throughout this section as the internal data (which internal data is the same as the information described under
Prospective Financial Information).
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Centerview also conducted discussions with members of
the senior management and representatives of the Company regarding their assessment of the internal data, the issuance of the Notes and the strategic rationale for the Merger. In addition, Centerview reviewed publicly available financial and stock
market data, including valuation multiples, for the Company and compared that data with similar data for certain other companies, the securities of which are publicly traded, and Centerview compared certain of the proposed financial terms of the
Merger with the financial terms, to the extent publicly available, of certain other transactions that Centerview deemed relevant. In addition, Centerview conducted such other financial studies and analyses and took into account such other
information as Centerview deemed appropriate.
Centerview did not assume any responsibility for independent verification of
any of the financial, legal, regulatory, tax, accounting and other information supplied to, discussed with, or reviewed by Centerview for purposes of the opinion and have, with the consent of the Special Committee, relied upon such information as
being complete and accurate. In that regard, Centerview assumed, at the direction of the Special Committee, that the internal data were reasonably prepared on bases reflecting the best currently available estimates and judgments of the management of
the Company as to the matters covered thereby and Centerview relied, at the direction of the Special Committee, on the internal data for purposes of Centerviews analysis and opinion. Centerview expressed no view or opinion as to the internal
data or the assumptions upon which it is based. In addition, at the direction of the Special Committee, Centerview did not make any independent evaluation or appraisal of any of the assets or liabilities (contingent, derivative, off-balance-sheet or
otherwise) of the Company, nor was Centerview furnished with any such evaluation or appraisal, and Centerview was not asked to conduct, and did not conduct, a physical inspection of the properties or assets of the Company. Centerview assumed, at the
direction of the Special Committee, that the final executed Amendment would not differ in any respect material to Centerviews analysis or opinion from the draft, dated May 20, 2013, of the Amendment reviewed by Centerview and that the
Merger will be consummated in accordance with the terms of the Merger Agreement, without the waiver, modification or amendment of any term, condition or agreement, the effect of which would be material to Centerviews analysis or opinion. In
addition, Centerview assumed that in the course of obtaining the necessary governmental, regulatory and other approvals, consents, releases and waivers for the Merger, no delay, limitation, restriction, condition or other change will be imposed, the
effect of which would be material to Centerviews analysis or opinion. Centerview did not evaluate and expressed no opinion as to the
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solvency or fair value of the Company, or the ability of the Company to pay its obligations when they come due, or as to the impact of the Merger on such matters, under any state, federal or
other laws relating to bankruptcy, insolvency or similar matters. Centerview is not a legal, regulatory, tax or accounting advisor, and it expressed no opinion as to any legal, regulatory, tax or accounting matters.
Centerview expressed no view in its opinion as to, and its opinion did not address, the Companys underlying business decision to
proceed with or effect the Merger, or the relative merits of the Merger as compared to any alternative business strategies or transactions that might be available to the Company or in which the Company might engage. In connection with
Centerviews engagement and at the direction of the Special Committee, Centerview was requested to approach, and Centerview held discussions with, selected third parties to solicit indications of interest in the possible acquisition of certain
assets of the Company. Centerviews opinion was limited to and addressed only the fairness, from a financial point of view, to the holders of our Class A Common Stock (other than affiliates of the Company), as of the date of the opinion,
of the Merger Consideration to be paid to such holders pursuant to the Merger Agreement. Centerview was not asked to and did not express any view in the opinion on, and Centerviews opinion did not address, any other term or aspect of the
Merger Agreement or the Merger, including, without limitation, the structure or form of the Merger, or any term or aspect of the issuance of the Notes or any other agreements or arrangements contemplated by the Merger Agreement or entered into in
connection with or otherwise contemplated by the Merger, including, without limitation, the fairness of the Merger to, or any consideration to be received in connection therewith by, or the impact of the Merger on, the holders of any other class of
securities, creditors, or other constituencies of the Company or any party. In addition, Centerview expressed no view or opinion as to the fairness (financial or otherwise) of the amount, nature or any other aspect of any compensation to be paid or
payable to any of the officers, directors or employees of the Company or any party, or class of such persons in connection with the Merger, whether relative to the Merger Consideration to be paid to the holders of our Class A Common Stock
(other than affiliates of the Company) pursuant to the Merger Agreement or otherwise. Centerviews opinion was necessarily based on economic, monetary, currency, market and other conditions and circumstances as in effect on, and the information
made available to Centerview as of the date of the written opinion, and Centerview does not have any obligation or responsibility to update, revise or reaffirm the opinion based on circumstances, developments or events occurring after the date of
the written opinion.
Centerviews opinion does not constitute a recommendation to any stockholder of the Company or any
other person as to how any such stockholder or other person should vote or otherwise act with respect to the Merger or any other matter.
Centerviews financial advisory services and the opinion expressed in the written opinion were provided for the information and assistance of the Special Committee and the Audit Committee in
connection with and for purposes of their consideration of the Merger. Centerviews opinion was approved by the Centerview Partners LLC Fairness Opinion Committee.
Summary of Financial Analyses
The following is a brief summary of
the material financial and comparative analyses that Centerview deemed to be appropriate for this type of transaction and that were reviewed with the Special Committee and the Audit Committee, in connection with rendering Centerviews opinion.
The following summary, however, does not purport to be a complete description of all the financial analyses performed by Centerview in connection with rendering its opinion, nor does the order of analyses described represent relative importance or
weight given to those analyses by Centerview.
Some of the summaries of the financial analyses include information presented
in tabular format. In order to fully understand the financial analyses, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the financial analyses. Considering the data in the
tables below without considering the full narrative description of the financial analyses, including the methodologies
S-15
and assumptions underlying the analyses, could create a misleading or incomplete view of the financial analyses of Centerview. Except as otherwise noted, the following quantitative information,
to the extent that it is based on market data, is based on market data as it existed on or before May 20, 2013 (the last trading day prior to the date that Centerview delivered its oral opinion to the Special Committee and the Audit Committee)
and is not necessarily indicative of current market conditions.
Historical Stock Trading Analysis
Centerview reviewed, for reference and informational purposes only, the historical trading prices and volumes of the shares of Company
Class A Common Stock for the 52-week period ended December 10, 2012 (the trading day prior to the date that information about a potential transaction between the Company and Sprint was reported in the press) and for the 52-week period
ended May 20, 2013. Centerview noted that the 52-week closing price low and the 52-week closing price high of the shares for the 52-week period ended December 10, 2012 (the trading day prior to the date that information about a potential
transaction between the Company and Sprint was reported in the press) were $0.90 and $2.69 per share, respectively, and that the 52-week closing price low and the 52-week closing price high of the shares for the 52-week period ended May 20,
2013 were $0.90 and $3.44 per share. Centerview compared the results of this analysis to the Merger Consideration to be paid to the holders of our Class A Common Stock (other than affiliates of the Company) pursuant to the Merger Agreement.
Centerview noted that the Merger Consideration to be paid to the holders of our Class A Common Stock (other than affiliates of the Company) pursuant to the Merger Agreement was above the range derived from the analysis for the 52-week period
ended December 10, 2012 and within the range derived from the analysis of the 52-week period ended May 20, 2013.
Analyst Price Targets Analysis
Centerview reviewed, for reference and informational purposes only, stock price targets of 6 research analysts for shares of Company Class A Common Stock reflected in certain publicly available Wall
Street research analyst reports.
The stock price targets for shares of Company Class A Common Stock and the report date
for each stock price target were as follows:
|
|
|
|
|
|
|
Firm
|
|
Report Date
|
|
Stock Price Target
|
|
Wells Fargo
|
|
May 2013
|
|
$
|
2.97
|
|
Davidson
|
|
April 2013
|
|
$
|
2.97
|
|
Guggenheim Partners
|
|
April 2013
|
|
$
|
3.00
|
|
Macquarie Capital
|
|
April 2013
|
|
$
|
3.50
|
|
Jefferies & Company
|
|
April 2013
|
|
$
|
3.15
|
|
UBS AG
|
|
April 2013
|
|
$
|
3.00
|
|
The stock prices targets in the table above represent one-year price targets, other than in the case of
Wells Fargo, where timing of target achievement is not given.
Centerview noted that the low and high analyst stock price
targets in such research analyst reports ranged from $3.00 to $3.15 (excluding the highest and lowest price targets) per share. Centerview compared the results of this analysis to the Merger Consideration to be paid to the holders of our
Class A Common Stock (other than affiliates of the Company) pursuant to the Merger Agreement. Centerview noted that the Merger Consideration to be paid to the holders of our Class A Common Stock (other than affiliates of the Company)
pursuant to the Merger Agreement was above the range derived from this analysis.
Selected Precedent Spectrum Transactions
Analysis
Centerview analyzed certain information relating to selected precedent transactions involving acquisitions of
spectrum blocks in the 2.5 GHz, WCS and MSS spectrum bands that Centerview, based on its experience and
S-16
professional judgment and conversations with senior management and representatives of the Company, deemed comparable to the Companys spectrum assets and the Merger for purposes of this
analysis. In addition, Centerview took into account the preliminary non-binding proposal by DISH on December 6, 2012 to acquire certain spectrum assets of the Company, which proposal we refer to as the Preliminary 2012 DISH Proposal, the
preliminary non-binding proposal by Verizon on April 8, 2013 to acquire certain spectrum assets of the Company, which proposal we refer to as the Preliminary 2013 Verizon Proposal, as well as the blended price paid by Sprint to purchase the
shares of Class A Common Stock and Class B Common Stock held by Eagle River and certain of its affiliates. The transactions analyzed were:
Preliminary Proposals
|
|
|
|
|
|
|
Date Announced
|
|
Seller
|
|
Acquiror
|
|
Proposed Transaction Value
/
MHz-POP
|
Not applicable
|
|
Clearwire Corporation
|
|
DISH Network
Corporation
|
|
$0.216
|
Not applicable
|
|
Clearwire Corporation
|
|
Verizon
|
|
$0.220-0.300
|
2.5 GHz Spectrum
|
|
|
|
|
|
|
Date Announced
|
|
Seller
|
|
Acquiror
|
|
Transaction Value
/MHz-POP
|
October 18, 2012
|
|
Eagle River Holdings, LLC
(Clearwire Class A
and Class B Common Shares)
|
|
Sprint Nextel
Corporation
|
|
$0.211
|
May 7, 2008
|
|
Sprint Nextel Corporation
|
|
Clearwire
Corporation
|
|
$0.255
|
February 15, 2007
|
|
BellSouth Corporation
|
|
Clearwire
Corporation
|
|
$0.176
|
WCS Spectrum
|
|
|
|
|
|
|
Date Announced
|
|
Seller
|
|
Acquiror
|
|
Transaction Value
/MHz-POP
|
August 2, 2012
|
|
NextWave Wireless, Inc.
|
|
AT&T Inc.
|
|
$0.211(a)
|
(a)
|
Includes C/D blocks not immediately usable due to requirement for guard bands. Excluding guard bands yields implied transaction value / MHz-POP
of $0.37.
|
MSS Spectrum
|
|
|
|
|
|
|
Date Announced
|
|
Seller
|
|
Acquiror
|
|
Transaction Value
/MHz-POP
|
June 14, 2011
|
|
Terrestar Networks Inc.
|
|
DISH Network
Corporation
|
|
$0.209
|
February 1, 2011
|
|
DBSD North America, Inc.
|
|
DISH Network
Corporation
|
|
$0.227
|
September 23, 2009
|
|
SkyTerra
Communications, Inc.
|
|
Harbinger Capital
Partners
Funds
(LightSquared)
|
|
$0.247
|
While none of the transactions used in this analysis are identical or involve spectrum assets directly
comparable to the Companys spectrum assets or the Merger, the selected transactions were chosen because they
S-17
involved spectrum blocks that were considered by Centerview to be most similar to the Companys spectrum assets for purposes of Centerviews analysis. In addition to the foregoing
transactions, Centerview also reviewed certain information relating to selected precedent transactions involving acquisitions of spectrum blocks in the advanced wireless services, which we refer to as AWS, spectrum. Such transactions were not
included in this analysis because Centerview, based on its experience and professional judgment and conversations with senior management and representatives of the Company, considered AWS spectrum insufficiently comparable to the Companys
spectrum assets for purposes of Centerviews analysis due to, among other things, the fact that (i) AWS spectrum has lower frequencies which allow for better propagation characteristics and more effective penetration of foliage and
buildings, (ii) AWS spectrum is subject to a different licensing scheme than spectrum in the 2.5 GHZ block, which utilizes non-standard geographic classifications and involves the management of multiple licenses and lessors, and
(iii) there is generally a higher demand for AWS spectrum due to the fact that many industry participants already own significant blocks of AWS spectrum.
For each of the selected transactions, based on publicly available information, the Preliminary 2012 DISH Proposal and the Preliminary 2013 Verizon Proposal, Centerview calculated and compared the
transaction value (or proposed transaction value) per MHz-POP, which is the product derived from multiplying the number of megahertz associated with a spectrum license by the population of the licenses service area.
This analysis indicated a minimum transaction value per MHz-POP of $0.176 and a maximum transaction value per MHz-POP of $0.255
(excluding the preliminary proposals). Centerview then applied this range to the Companys 47.0 billion MHz-POPs based on the internal data and adjusted the resulting transaction values by the Companys June 30, 2013 projected net
debt balance (including the net present value of spectrum leases) as provided by the Companys management. This analysis resulted in an illustrative implied equity value range of approximately $1.55 to $3.75 per share. Centerview compared the
results of this analysis to the Merger Consideration to be paid to the holders of our Class A Common Stock (other than affiliates of the Company) pursuant to the Merger Agreement. Centerview noted that the Merger Consideration to be paid to the
holders of our Class A Common Stock (other than affiliates of the Company) pursuant to the Merger Agreement was within the illustrative range of implied equity values per share derived from this analysis. Centerview noted that the Merger
Consideration to be paid to the holders of Class A Common Stock (other than affiliates of the Company) pursuant to the Merger Agreement implied a transaction value per MHz-POP of $0.242. Centerview noted that the implied transaction value per
MHz-POP of $0.242 was within the range of implied transaction value per MHz-POP derived from this analysis.
Premiums Paid
Analysis
Cash Transactions
Utilizing a publicly available transaction research database, Centerview identified cash only transactions for U.S.-based, publicly-traded, non-financial and non-real estate target companies with equity
values ranging between $1 billion and $5 billion, announced since January 1, 2009 for which there were relevant premiums paid data, of which there were 115 transactions. Centerview analyzed the premiums paid in such transactions based on the
value of the per share consideration received in the relevant transaction relative to the closing stock price of the target company 1-day, 1-week and 4-weeks prior to the announcement date of such transaction.
The following table presents the results of this analysis with respect to the selected transactions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1-Day Premium
|
|
|
1-Week Premium
|
|
|
4-Week Premium
|
|
25th Percentile
|
|
|
20
|
%
|
|
|
23
|
%
|
|
|
26
|
%
|
Median
|
|
|
32
|
%
|
|
|
35
|
%
|
|
|
36
|
%
|
Mean
|
|
|
37
|
%
|
|
|
38
|
%
|
|
|
45
|
%
|
75th Percentile
|
|
|
44
|
%
|
|
|
44
|
%
|
|
|
51
|
%
|
Based on the foregoing, Centerview applied the median 1-day premium of 32% to the closing price of the
shares of our Class A Common Stock on November 20, 2012 (the trading day prior to Sprints initial proposal to
S-18
the Company with respect to the Merger) of $2.12 and the mean 1-day premium of 37% to the closing price of the shares of our Class A Common Stock on December 10, 2012 (the trading day
prior to the date that information about a potential transaction between the Company and Sprint was reported in the press) of $2.40.
This analysis resulted in an illustrative implied equity value range of approximately $2.80 to $3.30 per share of our Class A Common Stock. Centerview compared the results of this analysis to the
Merger Consideration to be paid to the holders of our Class A Common Stock (other than affiliates of the Company) pursuant to the Merger Agreement. Centerview noted that the Merger Consideration to be paid to the holders of our Class A
Common Stock (other than affiliates of the Company) pursuant to the Merger Agreement was above the illustrative range of implied equity values per share derived from this analysis.
In addition, Centerview applied the median 1-day premium of 32% to the closing price of the shares of our Class A Common Stock on
October 10, 2012 (the trading day immediately prior to the date discussions between Sprint and SoftBank were first confirmed in the marketplace) of $1.30. This analysis extended the above referenced range and resulted in an illustrative implied
equity value range of approximately $1.70 to $3.30 per share of our Class A Common Stock. Centerview compared the results of this analysis to the Merger Consideration in cash to be paid to the holders of our Class A Common Stock (other
than affiliates of the Company) pursuant to the Merger Agreement. Centerview noted that the Merger Consideration to be paid to the holders of our Class A Common Stock (other than affiliates of the Company) pursuant to the Merger Agreement was
above the illustrative range of implied equity values per share derived from this analysis.
Minority Buy-Outs
Centerview reviewed premiums paid for U.S.-based publicly-traded companies in 9 cash-only transactions with
transaction equity value greater than $1.0 billion, involving majority holders buyout of minority holders that Centerview, based on its experience and professional judgment, deemed comparable to the Company and the Merger for purposes of this
analysis. These transactions were:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date Announced
|
|
Target
|
|
Acquiror
|
|
1-Day
Premium
|
|
|
1-Week
Premium
|
|
|
4-Week
Premium
|
|
June 2, 2010
|
|
Gerdau Ameristeel Corp.
|
|
Gerdau Steel North
America
Inc.
|
|
|
53.4
|
%
|
|
|
57.1
|
%
|
|
|
56.9
|
%
|
September 4, 2009
|
|
Odyssey Re Holdings Corp.
|
|
Fairfax Financial
Holdings
Ltd.
|
|
|
30.0
|
%
|
|
|
29.9
|
%
|
|
|
39.9
|
%
|
August 12, 2008
|
|
UnionBanCal Corp.
|
|
Mitsubishi UFJ
Financial Group Inc.
|
|
|
27.2
|
%
|
|
|
29.5
|
%
|
|
|
104.4
|
%
|
July 21, 2008
|
|
Genentech, Inc.
|
|
Roche Holding AG
|
|
|
16.1
|
%
|
|
|
26.0
|
%
|
|
|
28.1
|
%
|
March 10, 2008
|
|
Nationwide Financial
Services, Inc.
|
|
Nationwide Mutual
Insurance
Company
|
|
|
40.2
|
%
|
|
|
31.0
|
%
|
|
|
31.0
|
%
|
November 20, 2006
|
|
TD Banknorth Inc.
|
|
TD Bank Financial Group
|
|
|
7.3
|
%
|
|
|
9.1
|
%
|
|
|
8.6
|
%
|
February 6, 2006
|
|
Lafarge North America Inc.
|
|
Lafarge S.A.
|
|
|
33.8
|
%
|
|
|
34.4
|
%
|
|
|
40.5
|
%
|
September 1, 2005
|
|
7-Eleven, Inc.
|
|
Seven & I Holdings
Co., Ltd.
|
|
|
32.3
|
%
|
|
|
31.0
|
%
|
|
|
14.1
|
%
|
August 2, 2004
|
|
Cox Communications, Inc.
|
|
Cox Enterprises, Inc.
|
|
|
26.0
|
%
|
|
|
24.6
|
%
|
|
|
25.2
|
%
|
Centerview analyzed the premiums paid in the above transactions based on the value of the per share
consideration received in the relevant transaction relative to the closing stock price of the target company 1-day, 1-week and 4-weeks prior to the announcement date of such transaction.
The following table presents the results of this analysis with respect to the selected transactions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1-Day Premium
|
|
|
1-Week Premium
|
|
|
4-Week Premium
|
|
Minimum
|
|
|
7.3
|
%
|
|
|
9.1
|
%
|
|
|
8.6
|
%
|
Mean
|
|
|
29.6
|
%
|
|
|
30.3
|
%
|
|
|
38.8
|
%
|
Median
|
|
|
30.0
|
%
|
|
|
29.9
|
%
|
|
|
31.0
|
%
|
Maximum
|
|
|
53.4
|
%
|
|
|
57.1
|
%
|
|
|
104.4
|
%
|
S-19
Based on the foregoing, Centerview applied the median 1-day premium of 30% to the closing
price of the shares of our Class A Common Stock on November 20, 2012 (the trading day prior to Sprints initial proposal to the Company with respect to the Merger) of $2.12 and to the closing price of shares of our Class A Common
Stock on December 10, 2012 (the trading day prior to the date that information about a potential transaction between the Company and Sprint was reported in the press) of $2.40.
This analysis resulted in an illustrative implied equity value range of approximately $2.75 to $3.10 per share of our Class A Common
Stock. Centerview compared the results of this analysis to the Merger Consideration to be paid to the holders of our Class A Common Stock (other than affiliates of the Company) pursuant to the Merger Agreement. Centerview noted that the Merger
Consideration to be paid to the holders of our Class A Common Stock (other than affiliates of the Company) pursuant to the Merger Agreement was above the illustrative range of implied equity values per share derived from this analysis.
In addition, Centerview applied the median 1-day premium of 30% to the closing price of the shares on October 10, 2012
(the trading day immediately prior to the date discussions between Sprint and SoftBank were first confirmed in the marketplace) of $1.30 of our Class A Common Stock. This analysis extended the above referenced range and resulted in an
illustrative implied equity value range of approximately $1.70 to $3.10 per share of our Class A Common Stock. Centerview compared the results of this analysis to the Merger Consideration to be paid to the holders of our Class A Common
Stock (other than affiliates of the Company) pursuant to the Merger Agreement. Centerview noted that the Merger Consideration to be paid to the holders of our Class A Common Stock (other than affiliates of the Company) pursuant to the Merger
Agreement was above the illustrative range of implied equity values per share derived from this analysis.
Discounted Cash
Flow Analysis
Centerview performed a discounted cash flow analysis of the Company based on two sets of financial
projections of the Company for the second half of fiscal 2013 and for fiscal years 2014 through 2020 prepared by management of the Company: (1) a Single-Customer Case, which we refer to as the SCC, which assumes Sprint will remain the
Companys only major wholesale customer, and (2) a Multi-Customer Case, which we refer to as the MCC, which assumes the Company would achieve substantial non-Sprint network traffic beginning in 2014. See Prospective Financial
Information. The financial projections did not reflect any potential proceeds from the hypothetical divestiture of any of the Companys excess spectrum assets.
Based on each of the SCC and the MCC, Centerview calculated the forecasted unlevered free cash flows of the Company and determined a terminal value for the Company assuming a perpetuity growth rate range
of 1% to 3% based on Centerviews experience and professional judgment, which was informed, in part, by the EBITDA multiples implied by the terminal value calculated assuming various perpetuity growth rates. Centerview then discounted to
present value (utilizing a mid-year discounting convention and discounting back to July 1, 2013) the unlevered free cash flows of the Company and the terminal value, in each case using discount rates ranging from 10.0% to 17.5%, reflecting a
range of Centerviews estimates of the Companys weighted average cost of capital based on Centerviews review of the Companys weighted average cost of capital implied by (i) the Companys cost of equity derived using
the capital asset pricing model and (ii) the yield on the Companys outstanding traded debt securities. For each, Centerview reviewed values at December 10, 2012 (the trading day prior to the date that information about a potential
transaction between the Company and Sprint was reported in the press), October 10, 2012 (the trading day immediately prior to the date discussions between Sprint and Softbank were first confirmed in the marketplace) and October 11, 2011
(the trading day on which the Companys outstanding traded debt securities were traded at a price that implied the maximum yield to worst on these securities) and May 20, 2013 (the trading day prior to the rendering of Centerviews
opinion). In performing this analysis, Centerview also took into account the present value of the Companys net operating losses based on the estimated utilization of the Companys net operating losses per the Companys management,
discounted at a cost of equity ranging from 13% to 26%, which was based on Centerviews estimate of the
S-20
Companys cost of equity assuming a weighted average cost of capital ranging from 10.0% to 17.5%, the Companys after-tax cost of debt and the Companys ratio of debt to
capitalization.
This analysis resulted in an illustrative implied equity value range of approximately ($2.26) to $0.68 per
share of our Class A Common Stock based on the SCC and $3.23 to $13.92 per share of our Class A Common Stock based on the MCC. Centerview compared the results of the above analysis to the Merger Consideration to be paid to the holders of
our Class A Common Stock (other than affiliates of the Company) pursuant to the Merger Agreement. Centerview noted that the Merger Consideration to be paid to the holders of our Class A Common Stock (other than affiliates of the Company)
pursuant to the Merger Agreement was within the illustrative range of implied equity values per share derived from this analysis based on the MCC and above the illustrative range of implied equity values per share derived from this analysis based on
the SCC.
Centerview noted, however, that its assessment of the results of the discounted cash flow analysis was impacted by
(1) with respect to the MCC, the fact that Centerview had been informed by the management of the Company that there were significant historical and continuing challenges and uncertainty in its ability to attract additional wholesale spectrum
customers, and (2) the fact that based on management estimates, both the SCC and the MCC are expected to require significant amounts of capital to fully finance the corresponding business plans (approximately $3.5 billion of peak cumulative
cash shortfalls for the SCC in 2017 and approximately $2.1 billion of peak cumulative cash shortfalls for the MCC in 2015), which may not be available to the Company.
Other Considerations
The preparation of a fairness opinion is a
complex process and is not necessarily susceptible to partial analysis or summary description. Centerview believes that selecting portions of the analyses or of the summary set forth above, without considering the analyses as a whole, could create
an incomplete view of the processes underlying Centerviews opinion. In arriving at its fairness determination, Centerview considered the results of all of its analyses and did not attribute any particular weight to any factor or analysis
considered by it. Rather, Centerview made its determination as to fairness on the basis of its experience and professional judgment after considering the results of all of its analyses. In its analyses, Centerview considered industry performance,
general business, economic, market and financial conditions and other matters, many of which are beyond the control of the Company. No company or transaction used in the analyses is identical to the Company or the Merger, and an evaluation of the
results of the analyses is not entirely mathematical. Rather, the analyses involve complex considerations and judgments concerning financial and operating characteristics and other factors that could affect the public trading, acquisition or other
values of the companies and assets analyzed. The estimates contained in the analyses and the ranges of implied valuations resulting from any particular analysis are not necessarily indicative of actual values or predictive of future results or
values, which may be significantly more or less favorable than those suggested by the analyses. In addition, analyses relating to the value of businesses or securities do not purport to be appraisals or to reflect the prices at which businesses or
securities actually may be sold. Accordingly, the estimates used in, and the results derived from, the analyses are inherently subject to substantial uncertainty. Centerview prepared the above analyses for the purpose of providing its opinion to the
Special Committee and the Audit Committee regarding whether, as of the date of the written opinion, the Merger Consideration to be paid to the holders of our Class A Common Stock (other than affiliates of the Company) pursuant to the Merger
Agreement was fair, from a financial point of view, to such holders. Because these analyses are inherently subject to uncertainty, being based upon numerous factors or events beyond the control of the parties or their respective advisors, none of
the Company, Centerview or any other person assumes responsibility if future results are materially different from those forecasted.
The opinion and analyses of Centerview were only one of many factors taken into consideration by the Special Committee and the Audit Committee in their respective evaluations of the Merger. Consequently,
the analyses described above should not be viewed as determinative of the views of the Special Committee, the Audit Committee, the Board of Directors or the Companys management with respect to the Merger Consideration to be paid to the holders
of our Class A Common Stock (other than affiliates of the Company)
S-21
pursuant to the Merger Agreement or as to whether the Special Committee, the Audit Committee or the Board of Directors would have been willing to determine that a different consideration was
fair.
Centerview is a securities firm engaged directly and through affiliates in a number of investment banking, financial
advisory and merchant banking activities. Centerview has not in the past two years provided investment banking or other services to the Company. Centerview has not in the past two years provided, and is not currently providing, investment banking or
other services to Sprint or SoftBank. Centerview may provide investment banking or other services to the Company, Sprint or SoftBank, or their respective affiliates in the future, for which Centerview may receive compensation.
Under the terms of Centerviews engagement letter with the Special Committee, Centerview advised the Special Committee that, to the
knowledge of Centerview, its controlled affiliates and the principal members of the team working on its engagement, none of Centerview, its controlled affiliates and the principal members of the team working on its engagement had any direct material
economic interests in the Company, Sprint or Softbank, other than potential economic interests in accounts over which both (i) such person has no influence or control and (ii) such person has no knowledge of the holdings of such accounts.
In choosing a financial advisor, the Special Committee members discussed whether to engage a number of potential
internationally recognized financial services firms to act as financial advisor, including Centerview, based on the knowledge of the members of the Special Committee of firms with expertise in transactions similar to the Merger. The members of the
Special Committee then interviewed Centerview and, after consideration and confirmation that Centerview did not have a conflict of interest, selected Centerview as its financial advisor because it is an internationally recognized investment banking
firm that has substantial experience and expertise in transactions similar to the Merger. Centerview has acted as financial advisor to the Special Committee in connection with, and has participated in certain of the negotiations leading to, the
Merger. In consideration of Centerviews services, under the terms of Centerviews engagement letter with the Special Committee, Centerview will receive a transaction fee which is estimated as of May 21, 2013 to be approximately $11.7
million, $1 million of which was non-contingent and paid upon the engagement of Centerview, $2 million of which was paid upon the public announcement of the execution of the Merger Agreement, and the remainder of which will become payable upon the
consummation of the Merger. The Special Committee was aware of this fee structure, as well as the fact that Centerview would be entitled to receive a transaction fee in the event the Company entered into certain alternative transactions and an
expiration fee if the engagement is terminated under certain circumstances and took such information into account in considering the Centerview opinion and in making its recommendations to the Company board. The Company has also agreed to reimburse
Centerview for certain expenses arising, and to indemnify Centerview against certain liabilities that may arise, out of its engagement.
Opinion of Financial Advisor to the Board of Directors
The following information supplements the section of the Special Factors titled Opinion of Financial Advisor to the Board of Directors on page 62 of the proxy statement.
Opinion of Financial Advisor to the Board of Directors
In connection with Clearwires board of directors analysis and consideration of potential strategic alternatives, including the Merger, on December 7, 2012, Clearwires board of
directors retained Evercore to act as financial advisor to Clearwires board of directors. On May 21, 2013, at a meeting of Clearwires board of directors, Evercore delivered its oral opinion to Clearwires board of directors,
which opinion was subsequently confirmed by delivery of a written opinion, dated May 21, 2013, to the effect that, as of such date and based upon and subject to assumptions made, matters considered and limitations on the scope of review
undertaken by Evercore as set forth in its opinion, the Merger Consideration to be paid to the holders of shares of our Class A
S-22
Common Stock (other than affiliates of the Company) pursuant to the Merger was fair, from a financial point of view, to such holders.
The full text of the written opinion of Evercore, dated May 21, 2013, which sets forth, among other things, the procedures
followed, assumptions made, matters considered and limitations on the scope of review undertaken in rendering its opinion, is attached to this proxy statement as Annex S-K. You are urged to read Evercores opinion carefully and in its entirety.
Evercores opinion was directed to Clearwires board of directors and addresses, as of the date of such opinion, only the fairness, from a financial point of view, of the Merger Consideration to be paid to holders of our Class A
Common Stock (other than affiliates of the Company). The opinion does not address any other aspect of the proposed Merger and does not constitute a recommendation to Clearwires board of directors or to any other persons in respect of the
proposed Merger, including to any Clearwire shareholder as to how any such holder should vote or act in respect of the proposed Merger. Evercores opinion does not address the relative merits of the proposed Merger as compared to other business
or financial strategies that might be available to Clearwire, nor does it address the underlying business decision of Clearwire to engage in the proposed Merger. The summary of the Evercore opinion set forth in this proxy statement is qualified in
its entirety by reference to the full text of the opinion attached to this proxy statement as Annex S-K.
In connection
with rendering its opinion, Evercore has, among other things:
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(i)
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reviewed certain publicly available business and financial information relating to Clearwire that Evercore deemed to be relevant, including publicly available research
analysts estimates;
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(ii)
|
reviewed certain non-public historical financial statements and other non-public historical financial and operating data relating to Clearwire prepared and furnished to
Evercore by management of Clearwire;
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(iii)
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reviewed certain non-public projected financial data relating to Clearwire prepared and furnished to Evercore by management of Clearwire (including the Single-Customer
Case and Multi-Customer Case more fully described below under Prospective Financial Information), which we refer to as the Management Projections (which data is the same as the data contained in Prospective Financial
Information);
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(iv)
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discussed with management of Clearwire, Clearwires past and current operations, financial projections and current financial condition, including Clearwires
liquidity position and capital needs (and including managements views on the risks and uncertainties related to the foregoing);
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(v)
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reviewed the reported prices and the historical trading activity of the shares of Class A Common Stock;
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(vi)
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compared the valuation multiples relating to the Merger with those of certain other transactions that Evercore deemed relevant;
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(vii)
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reviewed the Merger Agreement dated December 17, 2012, and a draft of the amendment to the Merger Agreement dated May 21, 2013 which Evercore assumed was in
substantially final form and from which Evercore assumed the final form would not vary in any material respect to Evercores analysis;
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(viii)
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reviewed the Note Purchase Agreement, dated December 17, 2012, the First Amendment to Note Purchase Agreement, dated January 31, 2013, the Second Amendment to
Note Purchase Agreement, dated February 26, 2013, and the indenture relating to the Notes, dated March 1, 2013; and
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(ix)
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performed such other analyses and examinations and considered such other factors that Evercore deemed appropriate.
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For purposes of its analysis and opinion, Evercore assumed and relied upon, without undertaking any independent verification of, the
accuracy and completeness of all of the information publicly available, and all of
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the information supplied or otherwise made available to, discussed with, or reviewed by Evercore, and Evercore assumed no liability therefor. With respect to the Management Projections, Evercore
assumed that they had been reasonably prepared on bases reflecting the best currently available estimates and good faith judgments of management of Clearwire as to the future financial performance of Clearwire under the business assumptions
reflected therein. Evercore expressed no view as to any projected financial data relating to Clearwire or the assumptions on which they are based.
For purposes of rendering its opinion, Evercore assumed, in all respects material to its analysis, that the representations and warranties of each party contained in the Merger Agreement are true and
correct, that each party will perform all of the covenants and agreements required to be performed by it under the Merger Agreement and that all conditions to the consummation of the proposed Merger will be satisfied without material waiver or
modification thereof. Evercore further assumed that all governmental, regulatory or other consents, approvals or releases necessary for the consummation of the proposed Merger will be obtained without any material delay, limitation, restriction or
condition that would have an adverse effect on Clearwire or the consummation of the proposed Merger or materially reduce the benefits to the holders of the Class A Common Stock in the proposed Merger.
Evercore did not make or assume any responsibility for making any independent valuation or appraisal of the assets or liabilities of
Clearwire, nor was Evercore furnished with any such appraisals, nor did Evercore evaluate the solvency or fair value of Clearwire under any state or federal laws relating to bankruptcy, insolvency or similar matters. Evercores opinion was
necessarily based upon information made available to it as of the date of the opinion and financial, economic, market and other conditions as they existed and as can be evaluated on the date of the opinion. It should be understood that subsequent
developments may affect Evercores opinion and that Evercore does not have any obligation to update, revise or reaffirm its opinion. Clearwire advised Evercore that as of the date of the opinion, Clearwire did not expect to generate cumulative
positive cash flows during the next twelve months after the date of the Evercore opinion, that Clearwire would need to raise substantial additional capital to fund its business and meet its financial obligations beyond the next twelve months after
the date of the Evercore opinion and that the ability of Clearwire to successfully fulfill its additional capital needs in a timely manner was uncertain. In arriving at its opinion, Evercore took these views into account, as well as the impact of
Clearwires liquidity position and capital needs on the execution of Clearwires business plan.
Evercore was not
asked to pass upon, and expressed no opinion with respect to, any matter other than the fairness, as of the date of the Evercore opinion, to the holders of the Class A Common Stock (other than affiliates of the Company), from a financial point
of view, of the Merger Consideration as of the date of its opinion. Evercore did not express any view on, and its opinion did not address, the fairness of the proposed Merger to, or any consideration received in connection therewith by, the holders
of any other securities, creditors or other constituencies of Clearwire, nor as to the fairness of the amount or nature of any compensation to be paid or payable to any of the officers, directors or employees of Clearwire, or any class of such
persons, whether relative to the Merger Consideration to be paid to the holders of the Class A Common Stock (other than affiliates of the Company) or otherwise. Evercore did not express any view on, and its opinion did not address, the fairness
of the transactions contemplated by the Note Purchase Agreement or the values of the constituent elements of that transaction. Evercore assumed that any modification to the structure of the transaction will not affect its analysis in any material
respect. Evercores opinion did not address the relative merits of the Merger as compared to other business or financial strategies that might be available to Evercore, nor did it address the underlying business decision of Clearwire to engage
in the proposed Merger.
In arriving at its opinion, Evercore was not authorized to solicit, and did not solicit, interest
from any third party with respect to the acquisition of any or all of the shares of Class A Common Stock or any business combination or other extraordinary transaction involving Clearwire. Evercores opinion did not constitute a
recommendation to the board of directors or to any other persons in respect of the proposed Merger, including as to how any holder of shares of Class A Common Stock should vote or act in respect of the proposed Merger. Evercore expressed no
opinion as to the price at which shares of Clearwire will trade at any time. Evercores opinion noted
S-24
that it is not a legal, regulatory, accounting or tax expert and Evercore assumed the accuracy and completeness of assessments by Clearwire and its advisors with respect to legal, regulatory,
accounting and tax matters.
Evercores opinion was only one of many factors considered by the board of directors in its
evaluation of the proposed Merger and should not be viewed as determinative of the views of the board of directors or our management with respect to the proposed Merger or the Merger Consideration to be paid to holders of Clearwires
Class A Common Stock (other than affiliates of the Company). Consequently, the analyses as described below should not be viewed as determinative of the opinion of the Clearwire board of directors with respect to the Merger Consideration or of
whether the Clearwire board of directors would have been willing to agree to different consideration.
Set forth below is a
summary of the material financial analyses reviewed by Evercore with Clearwires board of directors on May 21, 2013 in connection with rendering the Evercore opinion. The following summary, however, does not purport to be a complete
description of the analyses performed by Evercore. The order of the analyses described and the results of these analyses do not represent relative importance or weight given to these analyses by Evercore. Except as otherwise noted, the following
quantitative information, to the extent that it is based on market data, is based on market data that existed on or before May 20, 2013, the most recent trading day before delivery of the opinion, and is not necessarily indicative of current
market conditions.
The following summary of financial analyses includes information presented in tabular format. These
tables must be read together with the text of each summary in order to understand fully the financial analyses. The tables alone do not constitute a complete description of the financial analyses. Considering the tables below without considering the
full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of Evercores financial analyses.
In conducting its analysis, Evercore used various methodologies to review the valuation of Clearwire to assess the fairness of the Merger
Consideration to be paid to the holders of shares of Class A Common Stock (other than affiliates of the Company). Specifically, Evercore conducted analyses of precedent premia paid analysis, selected publicly-traded companies, selected
precedent spectrum transactions, discounted cash flow, which we refer to as DCF, historical share price, and research analyst price targets. However, Evercore only relied upon the analyses of precedent premia paid analysis, selected publicly-traded
companies, selected precedent spectrum transactions and DCF for purposes of its opinion.
Analysis of Precedent Premia Paid
Evercore conducted a precedent premia paid analysis by analyzing three categories of transactions since January 1, 2000. A
description of each of the categories is provided below.
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All cash transactions wherein equity value purchased was greater than $500 million but less than $10 billion, which we refer to as All Cash
transactions, in which the acquirer purchased 100% of the target. There were 611 such transactions, and the median premium paid relative to the trading share prices one day prior to the announcement of these transactions was 26.6%, the median
premium paid relative to the trading share prices one week prior to the announcement of these transactions was 28.5%, and the median premium paid relative to the trading share prices four weeks prior to the announcement of these transactions was
31.7%.
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All cash transactions wherein equity value purchased was greater than $500 million by an acquirer who already had a less than 50% ownership in the
target and acquired the rest of the equity stake increasing its ownership to 100%, which we refer to as Minority-Led transactions. There were 23 such transactions, and the median premium paid relative to the trading share prices one day prior to the
announcement of these transactions was 30.2%, the median premium paid relative to the trading share prices one week prior to the announcement of these transactions was 32.7%, and the median premium
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S-25
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paid relative to the trading share prices four weeks prior to the announcement of these transactions was 44.5%.
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All cash transactions wherein equity value purchased was greater than $500 million by an acquirer who already had a greater than 50% ownership in the
target and acquired the rest of the equity stake increasing its ownership to 100%, which we refer to as Majority-Led transactions. There were 16 such transactions, and the median premium paid relative to the trading share prices one day prior to the
announcement of these transactions was 25.8%, the median premium paid relative to the trading share prices one week prior to the announcement of these transactions was 27.7%, and the median premium paid relative to the trading share prices four
weeks prior to the announcement of these transactions was 24.7%.
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Evercore applied these premia above
to Clearwires closing share price one day, one week and four weeks prior to the speculation in the markets about the Sprint-SoftBank Merger on October 11, 2012 and to Clearwires closing share price one day, one week and four weeks
prior to Sprints initial proposal to acquire the non-Sprint equity stake in Clearwire on November 21, 2012. The results are provided in the table below.
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Implied Share Price
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Share Price
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All Cash
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Minority-Led
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Majority-Led
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Prior to Sprint-SoftBank Speculation (10/11/12)
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1-Day Prior
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$
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1.30
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$
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1.65
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$
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1.69
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$
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1.64
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1-Week Prior
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$
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1.34
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$
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1.72
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$
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1.78
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$
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1.71
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4-Weeks Prior
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$
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1.63
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$
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2.15
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$
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2.36
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$
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2.03
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Prior to Initial Sprint Proposal (11/21/12)
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1-Day Prior
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$
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2.12
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$
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2.68
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$
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2.76
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$
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2.67
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1-Week Prior
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$
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2.22
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$
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2.85
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$
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2.95
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$
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2.84
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4-Weeks Prior
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$
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1.91
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$
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2.52
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$
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2.76
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$
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2.38
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Based on the above table, Evercore selected the high to low range of implied share prices based on
Clearwires closing share price prior to October 11, 2012 and on Clearwires closing share price prior to November 21, 2012. The table below summarizes the implied per share equity value reference ranges for Clearwire:
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Implied Equity Value per share
Valuation Reference Range for
Clearwire
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Prior to Sprint-SoftBank Speculation (10/11/12)
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$
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1.64 $2.36
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Prior to Initial Sprint Proposal (11/21/12)
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$
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2.38 $2.95
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Evercore noted that the Merger Consideration to be paid to holders of Clearwires Class A
Common Stock (other than affiliates of the Company) pursuant to the Merger Agreement exceeds the ranges of the share prices implied by Evercores analysis of precedent premia paid.
Analysis of Selected Publicly-Traded Companies
In order to derive an
implied per share equity value reference range for Clearwire, Evercore analyzed the implied spectrum value (or $/MHz-POP) based on public market trading values of similar companies. Evercore, based on its professional judgment and experience in the
wireless telecommunications industry, deemed the following two companies, which have either debt and/or equity trading in public markets, sufficiently comparable to Clearwire to serve as a useful basis for comparison:
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Globalstar, Inc., which we refer to as Globalstar
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S-26
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LightSquared Inc., which we refer to as LightSquared
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However, because of the inherent differences between the businesses, operations, spectrum portfolio, capital structure, regulatory characteristics and prospects of Clearwire and the selected comparable
companies, no comparable company is exactly the same as Clearwire.
Evercore reviewed, among other things, enterprise values
as a multiple of the total MHz-POPs of the selected comparable companies. For Globalstar, enterprise value was calculated as public market equity value plus debt, less cash and cash equivalents based on publicly available information. No value was
attributed to the existing mobile satellite services business for the purposes of this analysis. The implied spectrum value or implied $/MHz-POP for Globalstar was computed by dividing the calculated enterprise value by Globalstars MHz-POPs,
derived from the spectrum approved by the FCC for Ancillary Terrestrial Component purposes. For LightSquared, enterprise value was calculated based on the market value of LightSquared outstanding indebtedness including the present value of spectrum
leases less cash and cash equivalents. Since LightSquared is currently in restructuring, there is no publicly-traded market value for the common equity and no value has been attributed to the common equity for the purposes of this analysis. The
implied spectrum value or implied $/MHz-POP for LightSquared was computed by dividing the calculated enterprise value by LightSquareds MHz-POPs, derived from publicly available information on LightSquareds total spectrum portfolio.
Implied $/MHz-POPs multiples for the selected comparable companies is summarized below:
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Comparable Company
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Implied $/MHz-POPs
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Globalstar
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$
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0.18
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LightSquared
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$
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0.18
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Evercore then applied the range of selected calculated enterprise value to implied MHZ-POPs multiples of
$0.18/ MHz-POP derived from the selected comparable companies to the corresponding total MHz-POPs for Clearwire as furnished to Evercore by the management of Clearwire. This resulted in an implied enterprise value for Clearwire, which was then used
to derive an implied price per share of Common Stock. These implied share prices were derived by subtracting managements estimate of net debt and the present value of spectrum leases as of June 30, 2013 from enterprise value and then
dividing those amounts by the number of fully diluted shares of Clearwire at that particular share price. Net debt is the sum of interest bearing debt, minus the cash balance, in each case based on management estimates.
The table below summarizes the implied per share equity value reference ranges for Clearwire:
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Implied Equity Value per share
Valuation Reference Range for
Clearwire
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Selected Publicly-Traded Companies
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$
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1.54 $1.66
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As discussed above, because of the inherent differences between the businesses, operations, spectrum
portfolio, capital structure, regulatory characteristics and prospects of Clearwire and the selected comparable companies, no comparable company is exactly the same as Clearwire.
Evercore noted that the Merger Consideration to be paid to holders of Clearwires Class A Common Stock (other than affiliates
of the Company) pursuant to the Merger Agreement exceeds the range of the share prices implied by Evercores analysis of selected publicly-traded companies.
Analysis of Selected Precedent Spectrum Transactions
Evercore reviewed the
financial terms, to the extent publicly available, of transactions since 2007 related to the sale of spectrum that Evercore deemed relevant, based on its professional experience with transactions in the wireless telecommunications industry. The set
of transactions include the potential sale of spectrum pursuant to the revised proposal delivered by DISH on December 28, 2012, which proposal we refer to as the DISH
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Proposal, the potential tender offer for Clearwires Common Stock at a price of $3.30 per share pursuant to the DISH Proposal and the preliminary non-binding proposal by Verizon on
April 8, 2013 to acquire certain spectrum assets of Clearwire, which proposal we refer to as the Preliminary 2013 Verizon Proposal. For each of the selected precedent transactions, Evercore, using publicly available financial and other
information, determined the spectrum value or $/MHz-POP for the spectrum sold in each of these transactions. The implied spectrum value or $/MHz-POP for each of the relevant transactions is listed below:
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Acquirer
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Target
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Spectrum Band
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Date Transaction
Announced
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Implied $/MHz-
POP
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Preliminary 2013 Verizon Proposal
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Clearwire Spectrum
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EBS
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N/A
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$
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0.22-$0.30
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DISH Proposal Tender
Offer
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Clearwire
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EBS/BRS
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N/A
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$
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0.24
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DISH
Proposal Spectrum
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Clearwire
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EBS/BRS
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N/A
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$
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0.19
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Sprint
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Clearwire (Represents the sale of Eagle Rivers equity interest in Clearwire)
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EBS/BRS
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October 2012
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$
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0.21
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Sprint
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Clearwire (Represents
Clearwire equity
value received by
Sprint for its
contribution of spectrum)
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EBS/BRS
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May 2008
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$
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0.26
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Clearwire
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BellSouth
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BRS
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February 2007
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$
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0.18
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AT&T
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NextWave
(Implied price for
A&B Block only)
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WCS
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August 2012
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$
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0.35
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AT&T
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NextWave (All)
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WCS
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August 2012
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$
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0.19
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DISH
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Terrestar
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S-Band
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June 2011
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$
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0.21
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DISH
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Terrestar
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S-Band
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June 2011
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$
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0.13
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*
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DISH
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DBSD North America
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S-Band
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February 2011
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$
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0.23
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DISH
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DBSD North America
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S-Band
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February 2011
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$
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0.15
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*
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Harbinger
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SkyTerra
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L-Band
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September 2009
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$
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0.25
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*
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Evercore also analyzed implied $/MHz-POP multiples for the DISH/DBSD North America and the DISH/Terrestar transactions adjusted for the book value of satellite assets.
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None of these precedent transactions is identical or directly comparable to the Merger. Because the reasons
for, and the circumstances surrounding, each of the selected precedent transactions analyzed were so diverse, and because of the inherent differences between the operations and the financial condition of Clearwire and the companies involved in the
selected precedent transactions, Evercore believes that a comparable transaction analysis is not solely mathematical and involves complex considerations and judgments. As such, based on this analysis and Evercores professional judgment,
Evercore applied a range of the $0.18-$0.26 /MHz-POP to the aggregate MHz-POPs of Clearwire to calculate the implied enterprise value of Clearwire. The implied equity value of Clearwire was derived by subtracting net debt and the present value of
spectrum leases as of June 30, 2013 from enterprise value and then dividing those amounts by the number of fully diluted shares of Clearwire at that particular share price. Net debt is the sum of interest bearing debt, minus the cash balance,
in each case based on management estimates.
The Company is expected to continue to generate negative cash flows for the 12
months after the date of the Evercore opinion. As such, in order to illustrate the impact of reduction in cash on equity value, the equity value was derived as of June 30, 2013 and also as of December 31, 2013 using the same range of
$0.18-$0.26/MHz-
S-28
POPs discussed in the preceding paragraph and the estimated net debt corresponding to June 30, 2013 and December 31, 2013 and the present value of spectrum leases each as based on
estimates from management of Clearwire.
The table below summarizes the implied per share equity value reference ranges for
Clearwire:
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Implied Equity Value per share
Valuation Reference Range for
Clearwire
|
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Selected Precedent Transactions (6/30/13 Est. Net Debt Balance)
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$
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1.66 $3.91
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Selected Precedent Transactions (12/31/13 Est. Net Debt Balance)
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$
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1.31 $3.58
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Evercore noted that the Merger Consideration to be paid to holders of Clearwires Class A
Common Stock (other than affiliates of the Company) pursuant to the Merger Agreement is within the ranges of the share prices implied by Evercores analysis of selected precedent spectrum transactions.
Analysis of Discounted Cash Flow
As part of its analysis, and in order to estimate the implied present value of the equity value per share for Clearwire, Evercore prepared a discounted cash flow analysis for Clearwire.
A discounted cash flow analysis is a valuation methodology used to derive a valuation of an asset by calculating the present value of
estimated future cash flows to be generated by the asset. Present value refers to the current value of future cash flows or amounts and is obtained by discounting those future cash flows or amounts by a discount rate. Evercore performed a discounted
cash flow analysis for Clearwire by adding (1) the present value of Clearwire projected after-tax unlevered free cash flows for the second half of fiscal 2013 and for fiscal years 2014 through 2020, (2) the present value of the
terminal value of Clearwire as of the end of fiscal year 2020, and (3) the present value of net operating losses of Clearwire. For each year, unlevered free cash flow was derived as follows: EBITDA plus certain non-cash adjustments less taxes
less capital expenditures less changes in working capital, where changes in working capital can either be positive or negative. Terminal value refers to the present value of all future cash flows to be generated by an asset for the period after
fiscal year 2020. The unlevered free cash flows, range of terminal values and net operating losses were discounted to present values as of June 30, 2013.
Evercore estimated a range of terminal values as of the end of fiscal year 2020 calculated based on perpetuity growth rates of 2.0% to 4.0%, which Evercore selected based on its professional judgment and
experience in the wireless telecommunications industry. Evercore performed the discounted cash flow analysis using a range of discount rates from 10.0% to 17.5% which Evercore selected based on discount rate analysis (which took into account
macro-economic assumptions and estimates of risk, cost of financial distress, Clearwires cost of debt, weighted average cost of capital analysis and other appropriate factors), professional judgment and experience in the wireless
telecommunications industry. Evercore calculated per share equity values by first determining a range of enterprise values of Clearwire by adding the present values of the after-tax unlevered free cash flows, certain net operating losses and
terminal values for each perpetuity growth rate and discount rate scenario, and then subtracting from the enterprise values the estimated net debt as of June 30, 2013 and then dividing those amounts by the number of fully diluted shares of
Clearwire at that particular share price. Net debt is the sum of interest bearing debt, minus the cash balance, in each case based on management estimates at that date.
Evercore prepared discounted cash flow analyses for two sets of projections provided by the Companys management. One set of projections was based on the assumption that Sprint will continue to be
the Companys only primary wholesale customer, or the SCC; while the other set of projections was based on the assumption that the Company will be able to source additional large wholesale customers in addition to Sprint, or the MCC. Based on
management estimates, both sets of projections are expected to require significant amounts of capital to fully finance the corresponding business plans. The SCC and MCC are estimated to have peak cumulative cash
S-29
shortfalls of approximately $3.5 billion and $2.1 billion in 2017 and 2015, respectively, before the time at which the Company becomes net cash flow positive. The SCC and MCC assume that any
existing debt ($3.8 billion of which matures between 2015 and 2017) is refinanced at maturity at existing rates. In addition to the additional capital requirements needed to finance the SCC and MCC, management of Clearwire indicated that Clearwire
has encountered historical and continuing significant challenges and uncertainty in its ability to attract additional wholesale spectrum customers.
In the SCC case, the management of Clearwire indicated that the Company may have excess spectrum capacity that may not be required to operate the business. As such, in the SCC case, in addition to the
discounted cash flow analysis, Evercore also analyzed the incremental value to the equity of Clearwire from the net proceeds received from a potential sale of excess spectrum. For the purposes of this analysis, Evercore estimated $2.0 billion of net
proceeds or $1.19 -$1.32 per share of incremental equity value in addition to the equity value derived from the discounted cash flow analysis.
The table below summarizes the implied per share equity value reference ranges for Clearwire:
|
|
|
|
|
|
|
Implied Equity Value per share
Valuation Reference Range for
Clearwire*
|
|
DCF (SCC Case)
|
|
|
($1.91) $1.94
|
|
DCF (SCC Case + Potential Sale of Excess Spectrum)
|
|
|
($0.59) $3.14
|
|
DCF (MCC Case)
|
|
|
$3.81 $16.76
|
|
*
|
The SCC and MCC are estimated to have peak cumulative cash shortfalls of approximately $3.5 billion and $2.1 billion, in 2017 and 2015, respectively, before the time at
which the Company becomes net cash flow positive. The SCC and MCC assume that any existing debt ($3.8 billion of which matures between 2015 and 2017) is refinanced at maturity at existing rates.
|
Evercore noted that the Merger Consideration to be paid to holders of Clearwires Class A Common Stock (other than affiliates
of the Company) pursuant to the Merger Agreement exceeds the ranges of the share prices implied by Evercores analysis of the DCF (SCC Case) and the DCF (SCC Case + Potential Sale of Excess Spectrum) and is below the range of the share prices
implied by Evercores analysis of the DCF (MCC Case).
Review of Historical Share Prices
Evercore reviewed the recent stock price performance of Clearwire based on an analysis of public trading prices for the twelve months
ended May 20, 2013 (the last trading day prior to Sprints initial offer to acquire Clearwire). During this time period, the closing price of Class A Common Stock ranged from a low of $0.90 to a high of $3.44.
Review of Research Analyst Price Targets
Evercore compared recent publicly available research analyst price targets for Clearwire that were available to Evercore as of December 10, 2012, which was the day before there was speculation in the
markets about the Merger, and as of May 20, 2013. Evercore examined ten such analyst targets as of December 10, 2012 set forth in the table below, and noted that the low and high per share equity value price targets for Class A Common
Stock were $1.00 and $4.00, respectively. Given that the low target price of $1.00 represented a forward target price as of December 31, 2013, Evercore discounted this target price to December 31, 2012 assuming a cost of equity of 20.0%
based on Evercores professional judgment and experience in the wireless telecommunications industry, resulting in an adjusted low per-share equity value price target of $0.83 per share. Evercore also examined seven such analyst targets as of
May 20, 2013 set forth in the table below, and noted that the low and high per share equity value price targets for Class A Common Stock were $2.97 and $3.50, respectively. As such,
S-30
the publicly available analyst price targets indicated a range of $0.83 to $4.00 per share of Class A Common Stock.
|
|
|
|
|
|
|
|
|
Publication Date
|
|
Analyst
|
|
Price Target
|
|
|
Achievement Date
|
October 25, 2012
|
|
Bank of America Merrill Lynch
|
|
$
|
4.00
|
|
|
N/A
|
October 26, 2012
|
|
Guggenheim Partners
|
|
|
3.00
|
|
|
End of 2013
|
November 8, 2012
|
|
RBC
|
|
|
2.50
|
|
|
N/A
|
October 26, 2012
|
|
D.A. Davidson
|
|
|
3.00
|
|
|
12-18 months
|
October 26, 2012
|
|
Jefferies
|
|
|
2.00
|
|
|
Year-end 2013
|
October 25, 2012
|
|
Evercore Partners
|
|
|
1.75
|
|
|
N/A
|
October 26, 2012
|
|
Morgan Stanley
|
|
|
1.00
|
|
|
12 months
|
December 5, 2012
|
|
J.P. Morgan
|
|
|
4.00
|
|
|
N/A
|
November 1, 2012
|
|
Macquarie
|
|
|
2.75
|
|
|
12 months
|
October 26, 2012
|
|
UBS
|
|
|
1.75
|
|
|
12 months
|
|
|
|
|
April 26, 2013
|
|
Macquarie
|
|
|
3.50
|
|
|
12 months
|
April 26, 2013
|
|
New Street
|
|
|
3.50
|
|
|
N/A
|
April 26, 2013
|
|
Jefferies
|
|
|
3.15
|
|
|
N/A
|
April 26, 2013
|
|
Guggenheim
|
|
|
3.00
|
|
|
N/A
|
April 15, 2013
|
|
UBS
|
|
|
3.00
|
|
|
N/A
|
April 26, 2013
|
|
D.A. Davidson
|
|
|
2.97
|
|
|
12-18 months
|
April 26, 2013
|
|
Wells Fargo
|
|
|
2.97
|
|
|
N/A
|
General
The foregoing summary of certain material financial analyses does not purport to be a complete description of the analyses or data presented by Evercore. In connection with the review of the proposed
Merger by Clearwires board of directors, Evercore performed a variety of financial and comparative analyses for purposes of rendering its opinion. The preparation of a fairness opinion is a complex process and is not necessarily susceptible to
partial analysis or summary description. Selecting portions of the analyses or of the summary described above, without considering the analyses as a whole, could create an incomplete view of the processes underlying Evercores opinion. In
arriving at its fairness determination, Evercore considered the results of all the analyses and did not draw, in isolation, conclusions from or with regard to any one analysis or factor considered by it for purposes of its opinion. Rather, Evercore
made its determination as to fairness on the basis of its experience and professional judgment in the wireless telecommunications industry after considering the results of all the analyses. In addition, Evercore considered various assumptions more
or less probable than other assumptions, so that the range of valuations resulting from any particular analysis described above should therefore not be taken to be Evercores view of the value of Clearwire. No precedent spectrum sale
transaction used in the above analyses as a comparison is directly comparable to a potential sale of spectrum by Clearwire. Further, Evercores analyses involve complex considerations and judgments concerning financial and operating
characteristics and other factors that could affect the acquisition, public trading or other values of the companies or transactions used, including judgments and assumptions with regard to industry performance, general business, economic, market
and financial conditions and other matters, many of which are beyond the control of Clearwire or its advisors. The fact that any specific analysis has been referred to in the summary above is not meant to indicate that such analysis was viewed as
any more significant or was or should be given any greater weight than any other analysis.
Evercore prepared these analyses
for the purpose of providing an opinion to Clearwires board of directors as to the fairness, from a financial point of view, of the Merger Consideration to be paid to holders of shares of Class A Common Stock (other than affiliates of the
Company) pursuant to the proposed Merger. These analyses do not purport to be appraisals or to necessarily reflect the prices at which the business or securities actually may be sold. Any estimates contained in these analyses are not necessarily
indicative of actual future results, which
S-31
may be significantly more or less favorable than those suggested by such estimates. Accordingly, estimates used in, and the results derived from, Evercores analyses are inherently subject
to substantial uncertainty, and Evercore assumes no responsibility if future results are materially different from those forecasted in such estimates.
The issuance of the Evercore opinion was approved by an opinion committee of Evercore Group L.L.C.
Under the terms of Evercores engagement, Clearwire agreed to pay Evercore a customary fee for its services. Clearwire agreed to pay Evercore a total fee that is estimated as of May 21, 2013 to be
approximately $11.7 million, (i) $1 million of which was non-contingent and paid to Evercore upon the execution of its engagement letter with Clearwire, (ii) $2 million of which was paid to Evercore upon the public announcement by
Clearwire of Clearwires execution of the Merger Agreement and (iii) the remainder of which is contingent, and payable upon, consummation of the Merger. The board of directors of Clearwire was aware of this fee structure, as well as the
fact that Evercore would be entitled to receive a transaction fee in the event the Company entered into certain alternative transactions and an expiration fee if the engagement is terminated under certain circumstances, and took such information
into account in considering the Evercore opinion and in approving the Merger. In addition, Clearwire has agreed to reimburse Evercore for its reasonable out-of-pocket expenses (including legal fees, expenses and disbursements) incurred in connection
with its engagement, and to indemnify Evercore and its members, partners, officers, directors, advisors, representatives, employees, agents, affiliates or controlling persons against certain losses, claims, damages, liabilities or expense to which
any such person may become subject, relating to, arising out of or in connection with Evercores engagement, performance of any service in connection therewith or any transaction contemplated thereby. Prior to its engagement, Evercore informed
the board of directors of Clearwire that Eduardo Mestre, a Senior Managing Director of Evercore and a member of the Evercore team that would provide services to Clearwire, is a member of the Board of Directors of Comcast. The Clearwire Board
engaged Evercore and requested Evercores opinion after having been so informed.
During the two year period prior to the
date hereof, no material relationship existed between Evercore and its affiliates and Clearwire, Sprint or SoftBank pursuant to which compensation was received by Evercore or its affiliates as a result of such a relationship. Evercore may provide
financial or other services to Clearwire, Sprint or SoftBank or their respective affiliates in the future and in connection with any such services Evercore may receive compensation.
In the ordinary course of business, Evercore or its affiliates may actively trade the securities, or related derivative securities, or
financial instruments of Clearwire, Sprint and their respective affiliates, for its own account and for the accounts of its customers and, accordingly, may at any time hold a long or short position in such securities or instruments.
In choosing a financial advisor, the Companys board of directors discussed whether to engage a number of potential internationally
recognized financial services firms to act as financial advisor, including Evercore, based on the knowledge of the members of the Companys board or directors of firms with expertise in the industry in which the Company operates and in
transactions similar to the Merger. The members of the Companys board of directors then interviewed Evercore and certain other firms that the board of directors determined did not have conflicts and, after consideration and determination by
the board of directors that Evercore did not have a conflict of interest, selected Evercore as its financial advisor because it is an internationally recognized investment banking firm that has substantial experience in the telecommunications
industry, is familiar with spectrum, had performed work for the Company in the past and has substantial expertise in transactions similar to the Merger. Evercore is an internationally recognized investment banking firm and is regularly engaged in
the valuation of businesses in connection with mergers and acquisitions, leveraged buyouts, competitive biddings, private placements and valuations for corporate and other purposes.
S-32
Certain Effects of the Merger
The references to $2.97 in the section of the Special Factors titled Certain Effects of the Merger on page 75 of the proxy statement are replaced with a reference to
$3.40.
The following information replaces the last paragraph on page 75 of the proxy statement.
The primary benefit of the Merger to our unaffiliated stockholders (other than any stockholders who properly exercise their appraisal rights under
Delaware law) will be their right to receive a cash payment of $3.40, without interest, less applicable withholding taxes, for each share of Class A Common Stock held by such stockholders as described above, representing approximately a 161.5%
premium to the closing share price of the Companys Class A Common Stock the day before discussions between Sprint and SoftBank were first confirmed in the marketplace on October 11, 2012, with Clearwire speculated to be a part of
that transaction; and, approximately a 60.4% premium to the closing price the day before our receipt of Sprints initial $2.60 per share non-binding indication of interest on November 21, 2012.
Considerations Relating to the Merger; Certain Effects on the Company if the Merger is not Completed
The following replaces the paragraph titled The fairness opinion delivered by Centerview will not reflect changes in circumstances between
signing the Merger Agreement and the completion of the Merger in the section of the Special Factors titled Considerations Relating to the Merger; Certain Effects on the Company if the Merger is not Completed on page 77 of the proxy
statement.
The updated fairness opinion delivered by Centerview will not reflect changes in circumstances between the date of the
updated fairness opinion and the completion of the Merger.
The Special Committee of Clearwire has obtained an updated fairness opinion
dated as of May 21, 2013 from Centerview, financial advisor to the Special Committee. Changes in the operations and prospects of Sprint or Clearwire, general market and economic conditions and other factors that may be beyond the control of
Sprint or Clearwire, and on which the updated fairness opinion was based, may alter the value of Clearwire or the price of Clearwires Class A Common Stock by the time the Merger is completed. The updated Centerview opinion does not speak
as of the time the Merger will be completed or as of any date other than the date of the updated opinion. The updated Centerview opinion only addresses, as of the date of such updated opinion, the fairness, from a financial point of view, of the
Merger Consideration to be paid to the holders of Clearwires Class A Common Stock (other than affiliates of the Company). The updated opinion is attached to this proxy statement as Annex S-J. For a further discussion of the updated
Centerview opinion and a summary of the material financial analyses performed in connection with rendering the updated Centerview opinion, see Special FactorsOpinion of Financial Advisor to the Special Committee.
The following replaces the paragraph titled The fairness opinion delivered by Evercore will not reflect changes in circumstances between signing
the Merger Agreement and the completion of the Merger in the section of the Special Factors titled Considerations Relating to the Merger; Certain Effects on the Company if the Merger is not Completed on page 77 of the proxy
statement.
The updated fairness opinion delivered by Evercore will not reflect changes in circumstances between the date of the
updated fairness opinion and the completion of the Merger.
Clearwires board of directors has obtained an updated fairness
opinion dated as of May 21, 2013 from Evercore, Clearwires financial advisor. Changes in the operations and prospects of Sprint or Clearwire, general market and economic conditions and other factors that may be beyond the control of
Sprint or Clearwire, and on which the updated fairness opinion was based, may alter the value of Clearwire or the price of Clearwires Class A Common Stock by the time the Merger is completed. The updated Evercore opinion does not speak as
of the time
S-33
the Merger will be completed or as of any date other than the date of the updated opinion. The updated Evercore opinion only addresses, as of the date of such updated opinion, the fairness, from
a financial point of view, of the Merger Consideration to be paid to the holders of Clearwires Class A Common Stock (other than affiliates of the Company). The updated opinion is attached to this proxy statement as Annex S-K. For a
further discussion of the updated Evercore opinion and a summary of the material financial analyses performed in connection with rendering the updated Evercore opinion, see Special FactorsOpinion of Financial Advisor to the Board of
Directors.
Prospective Financial Information
The following information replaces the table and preceding paragraph in the section of the Special Factors titled Prospective Financial Information on pages 80 and 81 of the proxy
statement.
Set forth below is prospective financial information based on two sets of financial projections of the Company for fiscal
years 2012 through 2020 prepared by management of the Company and updated as of May 10, 2013 to reflect the Companys actual performance during the past two fiscal quarters: (1) the Single-Customer Case, which we refer to as the SCC,
which assumes Sprint will remain the Companys only major wholesale customer, and (2) the Multi-Customer Case, which we refer to as the MCC, which assumes the Company would achieve substantial non-Sprint network traffic from a second major
wholesale partner beginning in 2014. The Company, however, does not expect to be able to obtain a second significant wholesale customer and has been unable to obtain a second significant wholesale customer in spite of its efforts to do so for the
last two years. See Background of the Merger.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SCC
|
|
2011A
|
|
|
2012A
|
|
|
2013E
|
|
|
2014E
|
|
|
2015E
|
|
|
2016E
|
|
|
2017E
|
|
|
2018E
|
|
|
2019E
|
|
|
2020E
|
|
|
12-20
CAGR
|
|
Revenue
|
|
$
|
1,253
|
|
|
$
|
1,265
|
|
|
$
|
1,254
|
|
|
$
|
885
|
|
|
$
|
1,145
|
|
|
$
|
1,611
|
|
|
$
|
1,977
|
|
|
$
|
2,288
|
|
|
$
|
2,576
|
|
|
$
|
2,732
|
|
|
|
10.1
|
%
|
Adjusted EBITDA(1)
|
|
|
(305
|
)
|
|
|
(155
|
)
|
|
|
(187
|
)
|
|
|
(586
|
)
|
|
|
(351
|
)
|
|
|
254
|
|
|
|
618
|
|
|
|
1,049
|
|
|
|
1,355
|
|
|
|
1,440
|
|
|
|
NM
|
|
% Margin
|
|
|
NM
|
|
|
|
NM
|
|
|
|
NM
|
|
|
|
NM
|
|
|
|
NM
|
|
|
|
15.8
|
%
|
|
|
31.3
|
%
|
|
|
45.9
|
%
|
|
|
52.6
|
%
|
|
|
52.7
|
%
|
|
|
|
|
Capital expenditures(2)
|
|
|
220
|
|
|
|
181
|
|
|
|
371
|
|
|
|
375
|
|
|
|
146
|
|
|
|
161
|
|
|
|
233
|
|
|
|
229
|
|
|
|
295
|
|
|
|
317
|
|
|
|
7.2
|
%
|
Interest Expense
|
|
|
(474
|
)
|
|
|
(511
|
)
|
|
|
(512
|
)
|
|
|
(512
|
)
|
|
|
(512
|
)
|
|
|
(512
|
)
|
|
|
(512
|
)
|
|
|
(512
|
)
|
|
|
(512
|
)
|
|
|
(512
|
)
|
|
|
0.0
|
%
|
Free Cash Flow(3)
|
|
$
|
(1,357
|
)
|
|
$
|
(605
|
)
|
|
$
|
(1,066
|
)
|
|
$
|
(1,478
|
)
|
|
$
|
(1,248
|
)
|
|
$
|
(483
|
)
|
|
$
|
(174
|
)
|
|
$
|
265
|
|
|
$
|
510
|
|
|
$
|
591
|
|
|
|
NM
|
|
Cash Shortfall(4)
|
|
|
1,108
|
|
|
|
869
|
|
|
|
58
|
|
|
|
(1,479
|
)
|
|
|
(2,776
|
)
|
|
|
(3,293
|
)
|
|
|
(3,496
|
)
|
|
|
(3,238
|
)
|
|
|
(2,735
|
)
|
|
|
(2,152
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MCC
|
|
2011A
|
|
|
2012A
|
|
|
2013E
|
|
|
2014E
|
|
|
2015E
|
|
|
2016E
|
|
|
2017E
|
|
|
2018E
|
|
|
2019E
|
|
|
2020E
|
|
|
12-20
CAGR
|
|
Revenue
|
|
$
|
1,253
|
|
|
$
|
1,265
|
|
|
$
|
1,254
|
|
|
$
|
966
|
|
|
$
|
1,875
|
|
|
$
|
3,415
|
|
|
$
|
4,608
|
|
|
$
|
5,666
|
|
|
$
|
6,640
|
|
|
$
|
7,040
|
|
|
|
23.9
|
%
|
Adjusted EBITDA(1)
|
|
|
(305
|
)
|
|
|
(155
|
)
|
|
|
(187
|
)
|
|
|
(505
|
)
|
|
|
378
|
|
|
|
2,056
|
|
|
|
3,199
|
|
|
|
4,316
|
|
|
|
5,248
|
|
|
|
5,517
|
|
|
|
NM
|
|
% Margin
|
|
|
NM
|
|
|
|
NM
|
|
|
|
NM
|
|
|
|
NM
|
|
|
|
20.2
|
%
|
|
|
60.2
|
%
|
|
|
69.4
|
%
|
|
|
76.2
|
%
|
|
|
79.0
|
%
|
|
|
78.4
|
%
|
|
|
|
|
Capital expenditures(2)
|
|
|
220
|
|
|
|
181
|
|
|
|
371
|
|
|
|
375
|
|
|
|
188
|
|
|
|
341
|
|
|
|
461
|
|
|
|
567
|
|
|
|
664
|
|
|
|
704
|
|
|
|
18.5
|
%
|
Interest Expense
|
|
|
(474
|
)
|
|
|
(511
|
)
|
|
|
(512
|
)
|
|
|
(512
|
)
|
|
|
(512
|
)
|
|
|
(512
|
)
|
|
|
(512
|
)
|
|
|
(512
|
)
|
|
|
(512
|
)
|
|
|
(512
|
)
|
|
|
0.0
|
%
|
Free Cash Flow(3)
|
|
$
|
(1,357
|
)
|
|
$
|
(605
|
)
|
|
$
|
(1,066
|
)
|
|
$
|
(1,399
|
)
|
|
$
|
(648
|
)
|
|
$
|
1,008
|
|
|
$
|
2,079
|
|
|
$
|
2,539
|
|
|
$
|
2,399
|
|
|
$
|
2,607
|
|
|
|
NM
|
|
Cash Shortfall(4)
|
|
|
1,108
|
|
|
|
869
|
|
|
|
58
|
|
|
|
(1,400
|
)
|
|
|
(2,097
|
)
|
|
|
(1,124
|
)
|
|
|
926
|
|
|
|
3,458
|
|
|
|
5,850
|
|
|
|
8,450
|
|
|
|
|
|
(1)
|
Adjusted EBITDA is defined as consolidated operating loss less depreciation and amortization expenses, non-cash expenses related to operating leases (towers, spectrum
leases and buildings), stock-based compensation expense, loss from abandonment of network and other assets, charges for differences between recorded amounts and the results of physical counts, and charges for excessive and obsolete network equipment
and CPE inventory.
|
(2)
|
Capital expenditures include expenditures for the improvement and maintenance of our existing networks and for the deployment of our LTE network.
|
(3)
|
Free Cash Flow is defined as Adjusted EBITDA less capital expenditures, changes in net working capital, cash taxes and interest.
|
(4)
|
Cash shortfall is defined as cumulative Free Cash Flow adjusted for estimated actual 2012 year end cash balance of $869 million, and assumes our debt is refinanced at
maturity at existing rates and there is no incremental debt or other funding other than vendor financing.
|
S-34
Interests of Certain Persons in the Merger
The following information replaces the corresponding sections under the heading Special FactorsInterests of Certain Persons in the Merger
beginning on page 81 of
the proxy statement.
Stock Options and Restricted Share Units to be Cashed Out in the Merger
The following table sets forth, the number shares of Class A Common Stock of Clearwire and the number of restricted stock units held by directors and
executive officers and the cash proceeds that each of Clearwires directors and executive officers would receive at the closing of the Merger in respect of the cash-out of equity-based awards assuming continued service after the Merger and
assuming the closing of the Merger occurs on October 15, 2013.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested Equity
Awards That Will
Not Vest Upon
Completion
of the Merger
|
|
|
Unvested Equity
Awards That Will
Vest Upon
Completion
of the Merger
|
|
|
In-the-Money
Options that will
Vest Upon
the
Completion
of the Merger
|
|
|
Vested Equity
Awards and
Owned Shares
|
|
|
Total Cash
Payment With
Respect to All
Equity(1)
|
|
Executive Officers
|
|
Shares(2)
|
|
|
Value
|
|
|
Shares(3)
|
|
|
Value(4)
|
|
|
Shares
|
|
|
Value
|
|
|
Shares
|
|
|
Value(5)
|
|
|
Prusch, Erik E.
|
|
|
1,430,976
|
|
|
$
|
4,865,318
|
|
|
|
2,312,553
|
|
|
$
|
8,737,680
|
|
|
|
|
|
|
$
|
|
|
|
|
618,934
|
|
|
$
|
2,104,376
|
|
|
$
|
15,707,374
|
|
Cochran, Hope F.
|
|
|
353,536
|
|
|
$
|
1,202,022
|
|
|
|
674,915
|
|
|
$
|
2,532,211
|
|
|
|
37,500
|
|
|
$
|
13,875
|
|
|
|
303,438
|
|
|
$
|
1,031,689
|
|
|
$
|
4,779,798
|
|
Draper, Dow
|
|
|
286,196
|
|
|
$
|
973,066
|
|
|
|
469,953
|
|
|
$
|
1,772,840
|
|
|
|
56,250
|
|
|
$
|
20,813
|
|
|
|
152,960
|
|
|
$
|
520,064
|
|
|
$
|
3,286,783
|
|
Ednie, Steve
|
|
|
138,048
|
|
|
$
|
469,363
|
|
|
|
297,034
|
|
|
$
|
1,109,916
|
|
|
|
40,000
|
|
|
$
|
14,800
|
|
|
|
62,670
|
|
|
$
|
213,078
|
|
|
$
|
1,807,157
|
|
Hodder, Broady R.
|
|
|
232,324
|
|
|
$
|
789,902
|
|
|
|
494,841
|
|
|
$
|
1,844,959
|
|
|
|
50,000
|
|
|
$
|
18,500
|
|
|
|
246,139
|
|
|
$
|
836,873
|
|
|
$
|
3,490,234
|
|
Saw, John C.B.
|
|
|
387,206
|
|
|
$
|
1,316,500
|
|
|
|
664,045
|
|
|
$
|
2,545,253
|
|
|
|
50,000
|
|
|
$
|
18,500
|
|
|
|
336,539
|
|
|
$
|
1,144,233
|
|
|
$
|
5,024,486
|
|
Stroberg, Don
|
|
|
235,691
|
|
|
$
|
801,349
|
|
|
|
468,784
|
|
|
$
|
1,768,866
|
|
|
|
|
|
|
$
|
|
|
|
|
581,218
|
|
|
$
|
1,976,141
|
|
|
$
|
4,546,356
|
|
|
|
|
|
|
|
|
|
|
|
Non-Employee Directors
|
|
|
|
|
|
|
|
Shares(3)
|
|
|
Value
|
|
|
Shares
|
|
|
Value
|
|
|
Shares
|
|
|
Value(5)
|
|
|
|
|
Stanton, John W.
|
|
|
|
|
|
|
|
|
|
|
184,126
|
|
|
$
|
626,028
|
|
|
|
|
|
|
$
|
|
|
|
|
4,751,943
|
(6)
|
|
$
|
16,156,606
|
|
|
$
|
16,782,635
|
|
Blessing, William R.
|
|
|
|
|
|
|
|
|
|
|
42,152
|
|
|
$
|
143,317
|
|
|
|
|
|
|
$
|
|
|
|
|
89,330
|
|
|
$
|
303,722
|
|
|
$
|
447,039
|
|
Chatterley, Bruce A.
|
|
|
|
|
|
|
|
|
|
|
50,402
|
|
|
$
|
171,367
|
|
|
|
|
|
|
$
|
|
|
|
|
71,080
|
|
|
$
|
241,672
|
|
|
$
|
413,039
|
|
Cinali, Mufit
|
|
|
|
|
|
|
|
|
|
|
42,152
|
|
|
$
|
143,317
|
|
|
|
|
|
|
$
|
|
|
|
|
79,330
|
|
|
$
|
269,722
|
|
|
$
|
413,039
|
|
Collazo, Jose A.
|
|
|
|
|
|
|
|
|
|
|
33,652
|
|
|
$
|
114,417
|
|
|
|
|
|
|
$
|
|
|
|
|
184,720
|
|
|
$
|
628,048
|
|
|
$
|
742,465
|
|
Eslambolchi, Hossein
|
|
|
|
|
|
|
|
|
|
|
42,152
|
|
|
$
|
143,317
|
|
|
|
|
|
|
$
|
|
|
|
|
79,330
|
|
|
$
|
269,722
|
|
|
$
|
413,039
|
|
Gorton, Slade
|
|
|
|
|
|
|
|
|
|
|
148,074
|
|
|
$
|
503,452
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
$
|
503,452
|
|
Hersch, Dennis S.
|
|
|
|
|
|
|
|
|
|
|
33,652
|
|
|
$
|
114,417
|
|
|
|
|
|
|
$
|
|
|
|
|
126,720
|
|
|
$
|
430,848
|
|
|
$
|
545,265
|
|
McAndrews, Brian P.
|
|
|
|
|
|
|
|
|
|
|
33,652
|
|
|
$
|
114,417
|
|
|
|
|
|
|
$
|
|
|
|
|
126,720
|
(7)
|
|
$
|
430,848
|
|
|
$
|
545,265
|
|
Rae, Kathleen H.
|
|
|
|
|
|
|
|
|
|
|
63,402
|
|
|
$
|
215,567
|
|
|
|
|
|
|
$
|
|
|
|
|
109,543
|
|
|
$
|
372,446
|
|
|
$
|
588,013
|
|
Schell, Theodore H.
|
|
|
|
|
|
|
|
|
|
|
33,652
|
|
|
$
|
114,417
|
|
|
|
|
|
|
$
|
|
|
|
|
146,720
|
|
|
$
|
498,848
|
|
|
$
|
613,265
|
|
Vogel, Jennifer L.
|
|
|
|
|
|
|
|
|
|
|
50,402
|
|
|
$
|
171,367
|
|
|
|
|
|
|
$
|
|
|
|
|
71,080
|
|
|
$
|
241,672
|
|
|
$
|
413,039
|
|
(1)
|
All outstanding options having a per share exercise price greater than the Merger Consideration and will be cancelled as of the effective time of the Merger for no
consideration.
|
(2)
|
These restricted stock units (RSUs) were granted on March 1, 2013 and will vest in four equal annual installments beginning on March 1, 2014. At the effective
time of the merger, each of these RSUs will be converted into a right to receive a cash payment of $3.40 per share upon vesting, the aggregate amount of which we refer to as a 2013 Restricted Cash Account. The 2013 Restricted Cash Account will vest
in accordance with the original vesting schedule of the RSUs, subject to partial accelerated vesting in the event of certain terminations of the reporting persons employment.
|
(3)
|
This figure represents the unvested shares as of March 8, 2013 that were granted prior to December 17, 2012, and the prorated value of grants that were
approved on March 1, 2013 that will vest upon effectiveness of the merger in a pro-rated amount based on days of service.
|
(4)
|
Comprised of full acceleration of stock options and RSUs, assumes a stock price of $3.40 and the target value of Performance RSUs granted on February 12, 2012 and
to be released on March 1, 2014. The summary below shows the estimated value for such Performance RSUs. However, the number of shares subject to the Performance RSUs is not currently determinable. Mr. Prusch$875,000;
Ms. Cochran$237,500; Mr. Draper$175,000; Mr. Hodder$162,500; Dr. Saw$287,500; Mr. Stroberg$175,000; Mr. Ednie$100,000
|
S-35
(5)
|
Assumes a stock price of $3.40. Prior to closing, additional shares may become exercisable or be sold in ordinary course.
|
(6)
|
Includes 588,235 shares of Class A Common Stock issued in the name of CW Investments Holdings LLC, an affiliate of the stockholder, 100,000 shares of Class A
Common Stock issued in the name of The Aven Foundation, 375,000 shares of Class A Common Stock issued in the name of The Stanton Family Trust, and 100 shares held in the name of the stockholders son. Mr. Stanton shares control of The
Aven Foundation and disclaims beneficial ownership of the securities held by this entity. Mr. Stanton shares control of The Stanton Family Trust and disclaims beneficial ownership of these securities except to the extent of his pecuniary
interest and investment control therein.
|
(7)
|
Includes 40 shares of Class A Common Stock issued in the name of LKM Investments LLC, an entity managed by the stockholder.
|
2013 Bonus
The 2013 bonus for executive officers may, in certain cases, be more favorable to certain of executive officers than our historic annual bonus program. Clearwire has established a 2013 bonus plan with two
6-month performance periods. Clearwire has established the performance measures, targets, maximums and performance award levels in the ordinary course of business consistent with past practices for the period from January 1, 2013 through
June 30, 2013. If the closing of the Merger occurs prior to June 30, 2013, then the compensation committee of Clearwires board of directors may determine the actual achievement of the performance measure(s) based on the most recent
forecast available at that time. Clearwire (or if the closing of the Merger has occurred, Sprint) will establish the performance measures, targets, maximums and performance award levels for the period from July 1, 2013 through December 31,
2013. The Merger Agreement provides that any bonuses earned under the 2013 bonus plan will be paid in the ordinary course of business consistent with past practice in 2014, but in no event later than February 15, 2014. The aggregate amount of
bonus opportunities under the 2013 bonus plan will not exceed $18 million. To the extent an employee that is a participant in the Executive Continuity Plan resigns with Good Reason (as defined in the Executive Continuity Plan) or is
involuntarily terminated by Sprint without Cause (as defined in the Executive Continuity Plan) or due to such employees death or Disability (as defined in the Executive Continuity Plan) before payment of any bonuses
earned, and (A) if the employee is so terminated after the completion of a performance period, such employee will be entitled to payment of his actual performance bonus for such performance period, if such 2013 performance bonus has not yet
been paid, and (B) if the employee is so terminated during a performance period, such employee will be entitled to payment of a pro-rata portion of his performance bonus at target payout, based on the number of days worked in such performance
period through such employees termination date; in the case of (A) and (B) above, such payment will be made in all events no later than the later of (x) ten (10) business days following such employees termination of
employment, and (y) the last day of the surviving corporations first regular payroll cycle following such termination of employment. An employee will be entitled to a payment pursuant to (A) and (B) above, if his termination
occurs both during and after a performance period and he has not received any 2013 performance bonus payment at the time of his termination.
S-36
Clearwire Golden Parachute Compensation
The following table sets forth the information required by Item 402(t) of Regulation S-K regarding certain compensation which each of
the named executive officers of Clearwire may receive that is based on or that otherwise relates to the Merger, as described under Interests of Certain Persons in the Merger. This compensation is referred to as golden
parachute compensation. The golden parachute compensation payable to the named executive officers of Clearwire is subject to a non-binding advisory vote of Clearwire stockholders, as described under Merger-Related Executive
Compensation Arrangements. Please note that the amounts indicated below are estimates based on multiple assumptions that may or may not actually occur, including assumptions described in this proxy statement. As a result, the actual amounts,
if any, to be received by a named executive officer may differ from the amounts set forth below. In preparing the table, Clearwire made the following assumptions:
|
|
the closing of the Merger occurs on October 15, 2013, and
|
|
|
the employment of the named executive officers who are employed by Clearwire at the time of the Merger closing will terminate immediately after the
Merger on October 15, 2013, either by Clearwire without cause or by the named executive officer for good reason.
|
Golden Parachute Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Cash ($)(1)
|
|
|
Equity ($)(2)
|
|
|
Pension/
NQDC
($)
|
|
|
Perquisites/
Benefits
($)(3)
|
|
|
Tax
Reimbursement
($)(4)
|
|
|
Other
($)
|
|
|
Total
($)
|
|
Prusch, Erik E.
|
|
$
|
3,046,493
|
|
|
$
|
8,737,680
|
|
|
$
|
0
|
|
|
$
|
38,680
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
11,822,853
|
|
Cochran, Hope F.
|
|
$
|
1,113,946
|
|
|
$
|
2,532,211
|
|
|
$
|
0
|
|
|
$
|
19,340
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
3,665,497
|
|
Draper, Dow
|
|
$
|
836,551
|
|
|
$
|
1,772,840
|
|
|
$
|
0
|
|
|
$
|
19,340
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
2,644,711
|
|
Hodder, Broady R.
|
|
$
|
828,121
|
|
|
$
|
1,844,959
|
|
|
$
|
0
|
|
|
$
|
19,340
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
2,692,420
|
|
Saw, John C.B.
|
|
$
|
1,127,421
|
|
|
$
|
2,545,253
|
|
|
$
|
0
|
|
|
$
|
19,340
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
3,692,014
|
|
(1)
|
The aggregate dollar value of a cash severance payment to Mr. Prusch is comprised of two times the sum of his annual base salary of $761,623.20 and target bonus of
$761,623.20 as of May 20, 2013. The aggregate dollar value of a cash severance payment for Ms. Cochran is comprised of 1.5 times the sum of her annual base salary of $424,360.04 and target bonus of $318,270.03 as of May 20, 2013; the
aggregate dollar value of a cash severance payment for Mr. Draper is comprised of 1.5 times the sum of his annual base salary of $338,000.00 and $219,700.00 as of May 20, 2013; the aggregate dollar value of a cash severance payment for
Mr. Hodder is comprised of 1.5 times the sum of his annual base salary of $345,050.16 and target bonus of $207,030.10 as of May 20, 2013 and the aggregate dollar value of a cash severance payment for Dr. Saw is comprised of 1.5 times
the sum of his annual base salary of $455,523.12 and target bonus of $296,090.03 as of May 20, 2013.
|
(2)
|
Comprised of full acceleration of stock spread and RSUs, assumes a stock price of $3.40 and the target value of Performance RSUs. The equity value for Mr. Prusch
is comprised of the full acceleration value of stock spread and RSUs at $7,862,680 and the value of Performance RSUs deemed earned at 100% of target of $875,000. The equity value for Ms. Cochran is comprised of the full acceleration value of
stock spread and RSUs of $$2,294,711 and the value of Performance RSUs deemed earned at 100% of target of $237,500. The equity value for Mr. Draper is comprised of the full acceleration value of stock spread and RSUs of $1,613,820 and the value
of Performance RSUs deemed earned at 100% of target of $175,000. The equity value for Mr. Hodder is comprised of the full acceleration value of stock spread and RSUs of $$1,682,459 and the value of Performance RSUs deemed earned at 100% of
target of $162,500. The equity value for Dr. Saw is comprised of the full acceleration value of stock spread and RSUs of $$2,257,753 and the value of Performance RSUs deemed earned at 100% of target of $287,500.
|
(3)
|
The health and welfare benefit value is comprised of medical and dental coverage based on the rates as of January 1, 2013. The dollar value of
Mr. Pruschs health and welfare benefit coverage is comprised of two times the annual medical rate of $17,605 plus the annual dental rate of $1,735. The dollar value of
|
S-37
|
Ms. Cochrans health and welfare benefit coverage is comprised of one times the annual medical rate of $17,605 plus the annual dental rate of $1,735. The dollar value of
Mr. Drapers health and welfare benefit coverage is comprised of one times the annual medical rate of $17,605 plus the annual dental rate of $1,735. The dollar value of Mr. Hodders health and welfare benefit coverage is
comprised of one times the annual medical rate of $17,605 plus the annual dental rate of $1,735. The dollar value of Dr. Saws health and welfare benefit coverage is comprised of one times the annual medical rate of $17,605 plus the annual
dental rate of $1,735.
|
(4)
|
None of the named executive officers are entitled to tax reimbursements.
|
Financing of the Merger
The reference to $2.2 billion in the section
of the Special Factors titled Financing of the Merger on page 90 of the proxy statement is replaced with a reference to $2.6 billion.
Litigation Relating to the Merger
The following information supplements the section of
the Special Factors titled Litigation Relating to the Merger on page 91 of the proxy statement.
ACP Master, Ltd. et al, v.
Sprint Nextel Corp. et al, C.A. No. 8508-CS (Del. Ch. Ct.)
On or about April 26, 2013, ACP Master, Ltd.,
Aurelius Capital Master Ltd., and Aurelius Opportunities Fund II, LLC, each stockholders of the Company, filed a lawsuit in Delaware Court of Chancery against the Company, its directors, Sprint, and Sprint HoldCo, which action we refer to as the ACP
Action. The ACP Action alleges that the directors of the Company breached their fiduciary duties in connection with the Merger, that Sprint breached duties owed to the plaintiff stockholders by virtue of its alleged status as a controlling
stockholder, and that the Company aided and abetted the alleged breaches of fiduciary duty by Sprint and the directors of the Company. The ACP Action also alleges that the Merger Consideration undervalues the Company, that Sprint is using its
position as controlling stockholder to obtain Clearwires spectrum for itself to the detriment of the Companys minority stockholders, and that the terms of the Merger and the Note Purchase Agreement are coercive. The ACP Action seeks a
declaratory judgment that the Merger was entered into in breach of defendants fiduciary duties, an injunction preventing the proposed transaction between Sprint and the Company and, should the Merger be consummated, to rescind the Merger, a
declaratory judgment that the Note Purchase Agreement was unfair to plaintiff, and unspecified actual and consequential damages. On May 20, 2013, the Company, Sprint and Sprint HoldCo moved to dismiss the ACP Action. The directors
response to the complaint is due on May 30, 2013.
S-38
THE MERGER AGREEMENT
The following information replaces or supplements the information under the heading The Merger Agreement beginning on page 106 of the
proxy statement.
Merger Consideration
Clearwire Common Stock
The reference to $2.97 on page 107 of the
proxy statement is replaced with a reference to $3.40.
S-39
THE SPECIAL MEETING
The following information replaces the first paragraph of the section of the Special Meeting titled Time, Place and Purpose of the Special
Meeting on page 136 of the proxy statement.
Time, Place and Purpose of the Special Meeting
This proxy statement is being furnished to our stockholders as part of the solicitation of proxies by the board of directors for use at the Special
Meeting to be reconvened on May 31, 2013, starting at 10:30 a.m., Pacific Daylight Time at the Highland Center, unless further adjourned by the Company. Pursuant to Clearwires bylaws, the Chairman of the Special Meeting is granted
discretionary authority to adjourn the Special Meeting. At the Special Meeting, holders of our Common Stock will be asked to approve the Merger Agreement Proposal, to approve the Charter Amendment Proposal, to approve the NASDAQ Authorization
Proposal, to approve the Adjournment Proposal, and to approve the Golden Parachute Proposal.
S-40
OTHER IMPORTANT INFORMATION REGARDING CLEARWIRE
The following information replaces or supplements the information under the heading Other Important Information Regarding Clearwire
beginning on page 148 of the proxy statement.
Directors and Officers of the Company
Directors
The following
information replaces the corresponding line of the chart in the section of Other Important Information Regarding Clearwire titled Directors and Officers of the CompanyDirectors on page 148 of the proxy statement.
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Name
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Age
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Position
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Theodore H. Schell
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70
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Director
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Market Price of Common Stock and Dividends
The following information replaces the section of Other Important Information Regarding Clearwire titled Market Price Data of Common Stock and Dividend on page 154 of the proxy statement.
Our Class A Common Stock is listed for trading on NASDAQ under the symbol CLWR. We have not declared or
paid any cash dividends on our Class A Common Stock. The Merger Agreement does not permit us to pay any additional dividends on our Class A Common Stock without the prior written consent of Sprint. The table below shows, for the periods
indicated, the price range of our Class A Common Stock, as reported by NASDAQ.
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High
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Low
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Year Ended December 31, 2011:
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First Quarter
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$
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6.00
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$
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4.71
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Second Quarter
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$
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6.11
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$
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3.35
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Third Quarter
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$
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4.07
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$
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1.32
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Fourth Quarter
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$
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2.64
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$
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1.24
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Year Ended December 31, 2012:
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First Quarter
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$
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2.48
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$
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1.69
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Second Quarter
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$
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2.32
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$
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1.00
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Third Quarter
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$
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1.95
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$
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0.83
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Fourth Quarter
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$
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3.40
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$
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1.21
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Year Ended December 31, 2013:
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First Quarter
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$
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3.42
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$
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2.85
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Second Quarter (through May 21, 2013)
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$
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3.49
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$
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3.08
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The closing price of our Class A Common Stock on the NASDAQ on December 14, 2012, the last
trading day prior to the public announcement of the execution of the Merger Agreement, was $3.37 per share. The closing price of our Class A Common Stock on the NASDAQ on December 10, 2012, the trading day prior to the date that
information about a potential transaction between the Company and Sprint was reported in the press, was $2.40 per share. The closing price of our Class A Common Stock on the NASDAQ on November 20, 2012, the trading day prior to
Sprints initial proposal to the Company with respect to the Merger, was $2.12 per share. The closing price of our Class A Common Stock on the NASDAQ on October 10, 2012, the trading day immediately prior to the date discussions
between Sprint and SoftBank were first confirmed in the marketplace, with the Company speculated to be part of that transaction, was $1.30 per share.
S-41
On May 21, 2013, the most recent practicable date before the proxy statement supplement
was mailed to our stockholders, the closing price for our Class A Common Stock on NASDAQ was $3.40 per share. You are encouraged to obtain current market quotations for our Class A Common Stock in connection with voting your shares of
Class A Common Stock.
If the Merger is completed, there will be no further market for shares of our Class A Common
Stock and our Class A Common Stock will be delisted from NASDAQ and deregistered under the Exchange Act.
Certain Purchases and Sales
of Company Common Stock
The following information replaces the table on page 159 of the proxy statement in the section of Other
Important Information Regarding Clearwire titled Certain purchases and Sales of Company Common Stock.
The following table
sets forth information regarding purchases and sales of Class A Common Stock by the Companys executive officers and directors within the 60 days prior to the date of the proxy statement supplement, showing the date of such transaction,
the number of shares of Class A Common Stock sold and the price received for those shares. Unless otherwise indicated, each of the sales set out below represent the automatic sale of Class A Common Stock to satisfy tax withholding
obligations.
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Officer
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Date
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Price
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Shares
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John Saw
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Sell
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05/13/2013
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3.22
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10,450
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S-42
APPRAISAL RIGHTS
The references to $2.97 under the heading Appraisal Rights beginning on page 172 of the proxy statement are replaced with a
reference to $3.40.
S-43
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING INFORMATION
This proxy statement supplement, and the documents to which we refer you in this proxy statement supplement, as well as
information included in oral statements or other written statements made or to be made by us, contain statements that, in our opinion, may constitute forward-looking statements. Statements containing words such as expect, anticipate, believe,
estimate, likely or similar words that are used herein or in other written or oral information conveyed by or on behalf of the Company, are intended to identify forward-looking statements. Forward-looking statements are made based upon
managements current expectations and beliefs concerning future developments and their potential effects on the Company. Such forward-looking statements are not guarantees of future events. Actual results may differ, even materially, from those
contemplated by the forward-looking statements due to, among others, the following factors:
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our stockholders may not adopt the Merger Agreement;
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litigation in respect of the Merger could delay or prevent the closing of the Merger;
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the parties may be unable to obtain governmental and regulatory approvals required for the Merger, or required governmental and regulatory approvals
may delay the Merger or result in the imposition of conditions that could cause the parties to abandon the Merger;
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the parties may be unable to complete the Merger because, among other reasons, conditions to the closing of the Merger may not be satisfied or waived;
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our announcement and pursuit of the Merger may disrupt our business and make it more difficult to maintain our business and operational relationships
and the restrictions imposed on us prior to the closing of the Merger or termination of the Merger Agreement may prevent us from growing our business or operating outside of the ordinary course of business without the consent of Sprint;
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developments beyond the parties control, including but not limited to, changes in economic and employment conditions, competitive conditions and
health care reform;
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we may not be able to incur additional debt;
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our stockholders may not approve the Charter Amendment Proposal or the NASDAQ Approval Proposal; or
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the risk factors and other factors referred to in the Companys reports filed with or furnished to the SEC.
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Consequently, all of the forward-looking statements we make in this document are qualified by the information contained or referred to
herein, including, but not limited to, (i) the information contained under this heading and (ii) the information contained under the heading Risk Factors and that is otherwise disclosed in our annual report on Form 10-K
for the year ended December 31, 2012, filed with the SEC on February 14, 2013. See Where You Can Find More Information.
You should carefully consider the cautionary statements contained or referred to in this section in connection with any subsequent written or oral forward-looking statements that may be issued by us or
persons acting on our behalf. Except as required by law, we undertake no obligation to update any of these forward-looking statements.
S-44
WHERE CAN YOU FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other information with the SEC. You may read and copy any document we
file at the SEC public reference room located at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. Please call the SEC at 800-SEC-0330 for further information on the public reference room. Our SEC filings are also available
to the public at the SEC website at www.sec.gov. You also may obtain free copies of the documents we file with the SEC, including this proxy statement supplement, by going to the Investor Relations page of our corporate website at
www.clearwire.com. The information provided on our website, other than copies of the documents listed below that have been filed with the SEC, is not part of this proxy statement supplement, and therefore is not incorporated herein by reference.
Any person, including any beneficial owner, to whom this proxy statement supplement is delivered may request copies of this
proxy statement supplement or other information concerning us, without charge, by written or telephonic request directed to Clearwire Corporation, Attn: Investor Relations, 1475 120th Avenue Northeast, Bellevue, Washington 98005, Telephone
(425) 636-5828; or from our proxy solicitor, MacKenzie toll-free at (800) 322-2885, or collect at (212) 929-5500; or from the SEC through the SEC website at the address provided above.
Because the Merger is a going private transaction, the Company and Sprint have filed with the SEC a Transaction Statement on
Schedule 13E-3 with respect to the proposed Merger. The Schedule 13E-3, including any amendments and exhibits filed or incorporated by reference as a part of it, is available for inspection as set forth above. The Schedule 13E-3 will be amended to
report promptly any material changes in the information set forth in the most recent Schedule 13E-3 filed with the SEC.
THIS
PROXY STATEMENT SUPPLEMENT DOES NOT CONSTITUTE THE SOLICITATION OF A PROXY IN ANY JURISDICTION TO OR FROM ANY PERSON TO WHOM OR FROM WHOM IT IS UNLAWFUL TO MAKE SUCH PROXY SOLICITATION IN THAT JURISDICTION. YOU SHOULD RELY ONLY ON THE INFORMATION
CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROXY STATEMENT SUPPLEMENT TO VOTE YOUR SHARES OF COMMON STOCK AT THE SPECIAL MEETING. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT FROM WHAT IS CONTAINED IN THIS
PROXY STATEMENT SUPPLEMENT. THIS PROXY STATEMENT SUPPLEMENT IS DATED MAY 22, 2013. YOU SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED IN THIS PROXY STATEMENT SUPPLEMENT IS ACCURATE AS OF ANY DATE OTHER THAN THAT DATE, AND THE MAILING OF THIS
PROXY STATEMENT SUPPLEMENT TO STOCKHOLDERS DOES NOT CREATE ANY IMPLICATION TO THE CONTRARY.
S-45
Annex S-A
SECOND AMENDMENT TO
AGREEMENT AND PLAN OF MERGER
This Second Amendment (this
Amendment
) to the Merger Agreement (defined below) is made as of May 21, 2013 by and among: Sprint Nextel Corporation, a Kansas corporation (
Sprint
), Collie Acquisition Corp., a Delaware corporation and a
wholly owned subsidiary of Sprint (
Acquisition Corp.
), and Clearwire Corporation, a Delaware corporation (the
Company
, and together with Sprint and Acquisition Corp., the
Parties
). Capitalized
terms used but not defined in this Amendment have the meanings ascribed to them in the Merger Agreement.
RECITALS
WHEREAS, the Parties entered into that certain Agreement and Plan of Merger dated as of December 17, 2012, as
amended by the First Amendment to Agreement and Plan of Merger, dated as of April 18, 2013 (such agreement as so amended, the
Merger Agreement
); and
WHEREAS, the Parties desire to amend the Merger Agreement to amend the definition of Merger Consideration therein and to provide for a delay of the Company Stockholders Meeting.
NOW, THEREFORE, in consideration of the foregoing and for other valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Parties hereby agree as follows:
1.
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AMENDMENT TO MERGER AGREEMENT
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1.1. Amendment to Paragraph B of the Recitals of the Merger Agreement.
Paragraph B of the Recitals of the Merger Agreement is hereby amended by deleting $2.97 therein and substituting
therefor $3.40.
1.2. Amendment to Section 4.3(a) of the Merger Agreement.
Section 4.3(a) of the
Merger Agreement is hereby amended by deleting the second sentence thereof and substituting therefor the following:
The
Company Stockholders Meeting was convened on May 21, 2013 and was immediately adjourned to May 31, 2013. The Company Stockholders Meeting will be held on May 31, 2013 subject to any reasonable delay (but not longer than 10
days per event), including to the extent required by the need to supplement or amend the Proxy Statement or as may be required by Law or regulatory or judicial process.
1.3. Additional Representations of the Company.
The Company hereby represents and warrants to the Sprint Parties as follows:
(a) The Company has all requisite corporate power and authority to enter into this Amendment and, subject to the adoption of the Merger
Agreement by the Required Company Stockholder Vote, to carry out its obligations under the Merger Agreement (as amended by this Amendment) and to consummate the transactions contemplated by the Merger Agreement (as amended by this Amendment).
(b) The execution and delivery of this Amendment by the Company and the consummation by the Company of the transactions
contemplated by the Merger Agreement (as amended by this Amendment) have been duly authorized by all requisite corporate action on the part of the Company (other than obtaining the Required Company Stockholder Vote and filing of the Certificate of
Merger with the Secretary of State of the State of Delaware as required by the DGCL). The execution and delivery of this Amendment by the Company and the consummation by the Company of the transactions contemplated by this Amendment have been duly
authorized by all requisite corporate action on the part of the Company required under the Company Equityholders Agreement.
S-A-1
(c) This Amendment has been duly executed and delivered by the Company and, assuming the
due authorization, execution and delivery of this Amendment by each Sprint Party, constitutes the valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as such enforceability may be limited
by the Bankruptcy Exceptions.
1.4. Additional Representations of the Sprint Parties.
The Sprint Parties hereby
represent and warrant to the Company as follows:
(a) Each Sprint Party has all requisite corporate power and authority to
enter into this Amendment, to perform its obligations under this Amendment and to consummate the transactions contemplated by the Merger Agreement (as amended by this Amendment).
(b) The execution and delivery of this Amendment by each Sprint Party and the consummation by each Sprint Party of the transactions
contemplated by the Merger Agreement (as amended by this Amendment) have been duly authorized by all requisite corporate action on the part of each Sprint Party.
(c) This Amendment has been duly executed and delivered by each Sprint Party and, assuming the due authorization, execution and delivery of this Amendment by the Company, constitutes the valid and binding
obligation of each Sprint Party, enforceable against each Sprint Party in accordance with its terms, except as such enforceability may be limited by the Bankruptcy Exceptions.
1.5. Supplemental Proxy Materials; Schedule 13E-3 Amendment.
(a)
Promptly following the execution of this Amendment, the Company shall prepare and disseminate a supplement to the Proxy Statement reflecting the increased Merger Consideration and the adjournment of the Company Stockholders Meeting and,
without limiting Section 4.3 of the Merger Agreement, reaffirming the recommendation of the Companys Board of Directors (acting upon the recommendation of the Special Committee) to the Companys stockholders that such stockholders
vote FOR each of the proposals set forth in the Proxy Statement.
(b) The Parties shall prepare and file, in
connection with the supplement to the Proxy Statement, an amendment to the Schedule 13E-3 reflecting this Amendment and the supplement to the Proxy Statement.
2.1. Full
Force and Effect.
Except to the extent specifically amended herein or supplemented hereby, the Merger Agreement remains in full force and effect.
2.2. Counterparts.
This Amendment may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
S-A-2
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of
the date first written above.
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SPRINT NEXTEL CORPORATION
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By:
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/s/ Charles Wunsch
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Name:
Charles Wunsch
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Title:
General Counsel, SVP and Corp. Sec.
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COLLIE ACQUISITION CORP.
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By:
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/s/ Charles Wunsch
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Name:
Charles Wunsch
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Title:
President
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CLEARWIRE CORPORATION
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By:
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/s/ Erik Prusch
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Name:
Erik Prusch
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Title:
President & Chief Executive Officer
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[Signature page to the Second Amendment to the Merger Agreement]
S-A-3
Annex S-J
May 21, 2013
Special Committee of the Board of Directors
Clearwire Corporation
1425
120
th
Avenue NE
Bellevue, WA 98005
Audit Committee of the
Board of Directors
Clearwire Corporation
1425 120
th
Avenue NE
Bellevue, WA 98005
Ladies and Gentlemen:
We understand that
Clearwire Corporation (the Company) proposes to enter into a Second Amendment (the Amendment) to the Agreement and Plan of Merger, dated as of December 17, 2012 (as amended on April 18, 2013), by and among the
Company, Sprint Nextel Corporation (Acquiror) and Collie Acquisition Corp. (Merger Sub), a wholly owned subsidiary of Acquiror (as amended, including by the Amendment, the Merger Agreement). Pursuant to the Merger
Agreement, (a) Merger Sub will be merged with and into the Company (the Transaction) and (b) each share of Class A common stock, par value $0.0001 per share (the Shares), of the Company that is issued and
outstanding immediately prior to the effective time of the Transaction (other than (x) Shares held by any holder who properly demands appraisal rights in respect of such Shares and has not effectively withdrawn such demand immediately prior to
the effective time, (y) Shares held by Acquiror, SOFTBANK CORP. (SoftBank) and their respective affiliates and (z) Shares held by the Company or any wholly owned subsidiary of the Company or held in the Companys treasury)
will be converted into the right to receive an amount in cash equal to $3.40 (the Consideration). In addition, the Company has entered into a Note Purchase Agreement, dated as of December 17, 2012 (as amended on January 31,
2013 and February 26, 2013), by and among the Company, certain affiliates of the Company and Acquiror, pursuant to which Acquiror will purchase from certain affiliates of the Company exchangeable notes in the aggregate principal amount of up to
$800 million (the Interim Financing). The terms and conditions of the Transaction are more fully set forth in the Merger Agreement.
The Special Committee of the Board of Directors of the Company (the Special Committee) has requested our opinion as to the fairness, from a
financial point of view, to the holders of Shares (other than affiliates of the Company) of the Consideration to be paid to such holders pursuant to the Merger Agreement.
We have acted as financial advisor to the Special Committee in connection with, and have participated in certain of the negotiations leading to, the Transaction. We have received, and will receive, a fee
for our services in connection with the Transaction, a substantial portion of which is contingent upon the consummation of the Transaction. In addition, the Company has agreed to reimburse certain of our expenses arising, and indemnify us against
certain liabilities that may arise, out of our engagement.
We are a securities firm engaged directly and through affiliates in a number of
investment banking, financial advisory and merchant banking activities. We have not in the past two years provided investment banking or other services to the Company. We have not in the past two years provided, and are not currently providing,
investment banking or other services to Acquiror or SoftBank. We may provide investment banking or other services to the Company, Acquiror, SoftBank or their respective affiliates in the future, for which we may receive compensation.
In connection with this opinion, we have reviewed, among other things: (i) the Merger Agreement (including a draft dated May 20, 2013 of the
Amendment) and certain documents related to the Interim Financing; (ii) the
S-J-1
Special Committee of the Board of Directors
Audit Committee of the Board of Directors
Clearwire Corporation
May 21, 2013
Annual Reports on Form 10-K of the Company for the years ended December 31, 2009, 2010, 2011 and 2012; (iii) certain interim reports to stockholders, including Quarterly Reports on
Form 10-Q of the Company; (iv) certain publicly available research analyst reports for the Company; (v) certain other communications from the Company to its stockholders; and (vi) certain internal information relating to the business,
operations, earnings, cash flow, assets, liabilities and prospects of the Company furnished to us by the Company, including certain financial forecasts, analyses and projections relating to the Company prepared by management of the Company and
furnished to us by the Company (the Internal Data). We have conducted discussions with members of the senior management and representatives of the Company regarding their assessment of the Internal Data, the Interim Financing and the
strategic rationale for the Transaction. We have also reviewed publicly available financial and stock market data, including valuation multiples, for the Company and compared that data with similar data for certain other companies, the securities of
which are publicly traded, and we compared certain of the proposed financial terms of the Transaction with the financial terms, to the extent publicly available, of certain other transactions that we deemed relevant. In addition, we conducted such
other financial studies and analyses and took into account such other information as we deemed appropriate.
We have not assumed any
responsibility for independent verification of any of the financial, legal, regulatory, tax, accounting and other information supplied to, discussed with, or reviewed by us for purposes of this opinion and have, with the consent of the Special
Committee, relied upon such information as being complete and accurate. In that regard, we have assumed, at the direction of the Special Committee, that the Internal Data has been reasonably prepared on bases reflecting the best currently available
estimates and judgments of the management of the Company as to the matters covered thereby and we have relied, at the direction of the Special Committee, on the Internal Data for purposes of our analysis and this opinion. We express no view or
opinion as to the Internal Data or the assumptions on which it is based. In addition, at the direction of the Special Committee, we have not made any independent evaluation or appraisal of any of the assets or liabilities (contingent, derivative,
off-balance-sheet or otherwise) of the Company, nor have we been furnished with any such evaluation or appraisal, and we have not been asked to conduct, and did not conduct, a physical inspection of the properties or assets of the Company. We have
assumed, at the direction of the Special Committee, that the final executed Amendment will not differ in any respect material to our analysis or this opinion from the draft Amendment reviewed by us and that the Transaction will be consummated in
accordance with the terms of the Merger Agreement, without the waiver, modification or amendment of any term, condition or agreement, the effect of which would be material to our analysis or this opinion. In addition, we have assumed that in the
course of obtaining the necessary governmental, regulatory and other approvals, consents, releases and waivers for the Transaction, no delay, limitation, restriction condition or other change will be imposed, the effect of which would be material to
our analysis or this opinion. We have not evaluated and do not express any opinion as to the solvency or fair value of the Company, or the ability of the Company to pay its obligations when they come due, or as to the impact of the Transaction on
such matters under any state, federal, or other laws relating to bankruptcy, insolvency or similar matters. We are not legal, regulatory, tax or accounting advisors, and we express no opinion as to any legal, regulatory, tax or accounting matters.
We express no view herein as to, and our opinion does not address, the Companys underlying business decision to proceed with or effect
the Transaction, or the relative merits of the Transaction as compared to any alternative business strategies or transactions that might be available to the Company or in which the Company might engage. In connection with our engagement and at the
direction of the Special Committee, we were requested to approach, and we held discussions with, selected third parties to solicit indications of interest in the possible acquisition of certain assets of the Company. This opinion is limited to and
addresses only the fairness, from a financial point of view, to the holders of Shares (other than affiliates of the Company), as of the date hereof, of the Consideration to be paid to such holders pursuant to the Merger Agreement. We have not been
asked to, nor
S-J-2
Special Committee of the Board of Directors
Audit Committee of the Board of Directors
Clearwire Corporation
May 21, 2013
do we, express any view herein on, and our opinion does not address, any other term or aspect of the Merger Agreement or the Transaction, including, without limitation, the structure or form of
the Transaction, or any term or aspect of the Interim Financing or any other agreements or arrangements contemplated by the Merger Agreement or entered into in connection with or otherwise contemplated by the Transaction, including, without
limitation, the fairness of the Transaction to, or any consideration to be received in connection therewith by, or the impact of the Transaction on, the holders of any other class of securities, creditors, or other constituencies of the Company or
any party. In addition, we express no view or opinion as to the fairness (financial or otherwise) of the amount, nature or any other aspect of any compensation to be paid or payable to any of the officers, directors or employees of the Company or
any party, or class of such persons in connection with the Transaction, whether relative to the Consideration to be paid to the holders of Shares (other than affiliates of the Company) pursuant to the Merger Agreement or otherwise. Our opinion is
necessarily based on economic, monetary, currency, market and other conditions and circumstances as in effect on, and the information made available to us as of the date hereof, and we do not have any obligation or responsibility to update, revise
or reaffirm this opinion based on circumstances, developments or events occurring after the date hereof. Our opinion does not constitute a recommendation to any stockholder of the Company or any other person as to how such stockholder or other
person should vote or otherwise act with respect to the Transaction or any other matter.
Our financial advisory services and the opinion
expressed herein are provided for the information and assistance of the Special Committee and the Audit Committee of the Board of Directors of the Company in connection with and for purposes of their consideration of the Transaction. This opinion
was approved by the Centerview Partners LLC Fairness Opinion Committee.
Based upon and subject to the foregoing, including the various
assumptions and limitations set forth herein, we are of the opinion, as of the date hereof, that the Consideration to be paid to the holders of Shares (other than affiliates of the Company) pursuant to the Merger Agreement is fair, from a financial
point of view, to such holders.
Very truly yours,
/s/ Centerview Partners LLC
CENTERVIEW PARTNERS LLC
S-J-3
Annex S-K
E
V E R C O R E
G
R O U P
L.L.C.
May 21, 2013
The Board of
Directors of
Clearwire Corporation
1475 120th Avenue Northeast
Bellevue,
Washington 98005
Members of the Board of Directors:
Clearwire Corporation, a Delaware corporation (the
Company
), entered into an Agreement and Plan of Merger, dated as of December 17, 2012, (the
Agreement
), with
Sprint Nextel Corporation, a Kansas corporation (
Parent
), and Collie Acquisition Corp. (
Merger Sub
), a Delaware corporation and wholly-owned subsidiary of Parent. We understand that the Parties to the Agreement
intend to amend the Agreement as of the date hereof. Pursuant to the Agreement as amended, Merger Sub will be merged with and into the Company in a merger (the
Merger
) in which all of the issued and outstanding shares of
Class A common stock, par value $0.0001 per share, of the Company (the
Class A Common Stock
), other than shares owned by SOFTBANK CORP., Parent or any wholly owned subsidiary of Parent and Dissenting Shares (as defined in the
Agreement), will be converted into the right to receive $3.40 per share, in cash without interest (the
Merger Consideration
). The terms and conditions of the Merger are more fully set forth in the Agreement and terms used herein
and not defined shall have the meanings ascribed thereto in the Agreement.
The Board of Directors has asked us whether, in
our opinion, the Merger Consideration to be received by the holders of shares of Class A Common Stock (other than affiliates of the Company), pursuant to the Agreement as amended is fair, from a financial point of view, to such holders.
In connection with rendering our opinion, we have, among other things:
(i) reviewed certain publicly available business and financial information relating to the Company that we deemed to be relevant,
including publicly available research analysts estimates;
(ii) reviewed certain non-public historical financial
statements and other non-public historical financial and operating data relating to the Company prepared and furnished to us by management of the Company;
(iii) reviewed certain non-public projected financial data relating to the Company prepared and furnished to us by management of the Company (the
Management Projections
);
(iv) discussed with management of the Company, the Companys past and current operations, financial projections and current
financial condition, including the Companys liquidity position and capital needs (and including managements views on the risks and uncertainties related to the foregoing);
(v) reviewed the reported prices and the historical trading activity of the shares of Class A Common Stock;
(vi) compared the valuation multiples relating to the Merger with those of certain other transactions that we deemed relevant;
(vii) reviewed the Agreement and a draft of the amendment to the Agreement dated May 21, 2013, which we have assumed is
in substantially final form and from which we assume the final form will not vary in any material respect to our analysis;
S-K-1
(viii) reviewed the Note Purchase Agreement, dated December 17, 2012, the First
Amendment to Note Purchase Agreement, dated January 31, 2013, the Second Amendment to Note Purchase Agreement, dated February 26, 2013, and the indenture relating to the Notes, dated March 1, 2013; and
(ix) performed such other analyses and examinations and considered such other factors that we deemed appropriate.
For purposes of our analysis and opinion, we have assumed and relied upon, without undertaking any independent verification of, the
accuracy and completeness of all of the information publicly available, and all of the information supplied or otherwise made available to, discussed with, or reviewed by us, and we assume no liability therefor. With respect to the Management
Projections, we have assumed that they have been reasonably prepared on bases reflecting the best currently available estimates and good faith judgments of management of the Company as to the future financial performance of the Company under the
business assumptions reflected therein. We express no view as to any projected financial data relating to the Company or the assumptions on which they are based.
For purposes of rendering our opinion, we have assumed, in all respects material to our analysis, that the representations and warranties of each party contained in the Agreement are true and correct,
that each party will perform all of the covenants and agreements required to be performed by it under the Agreement and that all conditions to the consummation of the Merger will be satisfied without material waiver or modification thereof. We have
further assumed that all governmental, regulatory or other consents, approvals or releases necessary for the consummation of the Merger will be obtained without any material delay, limitation, restriction or condition that would have an adverse
effect on the Company or the consummation of the Merger or materially reduce the benefits to the holders of the Class A Common Stock in the Merger.
We have not made nor assumed any responsibility for making any independent valuation or appraisal of the assets or liabilities of the Company, nor have we been furnished with any such appraisals, nor have
we evaluated the solvency or fair value of the Company under any state or federal laws relating to bankruptcy, insolvency or similar matters. Our opinion is necessarily based upon information made available to us as of the date hereof and financial,
economic, market and other conditions as they exist and as can be evaluated on the date hereof. It is understood that subsequent developments may affect this opinion and that we do not have any obligation to update, revise or reaffirm this opinion.
You have advised us that the Company does not expect to generate cumulative positive cash flows during the next twelve months, that the Company will need to raise substantial additional capital to fund its business and meet its financial obligations
beyond the next twelve months and that the ability of the Company to successfully fulfill its additional capital needs in a timely manner is uncertain. In arriving at our opinion, we have taken these views into account, as well as the impact of the
Companys liquidity position and capital needs on the execution of the Companys business plan.
We have not been
asked to pass upon, and express no opinion with respect to, any matter other than the fairness to the holders of the Class A Common Stock (other than affiliates of the Company), from a financial point of view, of the Merger Consideration. We do
not express any view on, and our opinion does not address, the fairness of the proposed Merger to, or any consideration received in connection therewith by, the holders of any other securities, creditors or other constituencies of the Company, nor
as to the fairness of the amount or nature of any compensation to be paid or payable to any of the officers, directors or employees of the Company, or any class of such persons, whether relative to the Merger Consideration or otherwise. We do not
express any view on, and our opinion does not address, the fairness of the transactions contemplated by the Note Purchase Agreement or the values of the constituent elements of that transaction. We have assumed that any modification to the structure
of the transaction will not affect our analysis in any material respect. Our opinion does not address the relative merits of the Merger as compared to other business or financial strategies that might be available to the Company, nor does it address
the underlying business decision of the Company to engage in the Merger.
S-K-2
In arriving at our opinion, we were not authorized to solicit, and did not solicit, interest
from any third party with respect to the acquisition of any or all of the shares of Class A Common Stock or any business combination or other extraordinary transaction involving the Company. This letter, and our opinion, does not constitute a
recommendation to the Board of Directors or to any other persons in respect of the Merger, including as to how any holder of shares of Class A Common Stock should vote or act in respect of the Merger. We express no opinion herein as to the
price at which shares of the Company will trade at any time. We are not legal, regulatory, accounting or tax experts and have assumed the accuracy and completeness of assessments by the Company and its advisors with respect to legal, regulatory,
accounting and tax matters.
We have acted as financial advisor to the Company in connection with the Merger and in accordance
with the terms of our engagement letter with the Company, we were paid an initial fee at the time we were engaged by the Company on behalf of the Board of Directors as well as an additional fee for our services upon the rendering to the Board of
Directors our opinion, dated December 16, 2012, in connection with certain aspects of the Agreement. The Company has also agreed to reimburse our expenses and to indemnify us against certain liabilities arising out of our engagement. We will
also be entitled to receive a success fee if the Merger is consummated. During the two year period prior to the date hereof, no material relationship existed between Evercore Group L.L.C. and its affiliates and Parent pursuant to which compensation
was received by Evercore Group L.L.C. or its affiliates as a result of such a relationship. We may provide financial or other services to the Company or Parent or their respective affiliates in the future and in connection with any such services we
may receive compensation.
In the ordinary course of business, Evercore Group L.L.C. or its affiliates may actively trade the
securities, or related derivative securities, or financial instruments of the Company, Parent and their respective affiliates, for its own account and for the accounts of its customers and, accordingly, may at any time hold a long or short position
in such securities or instruments.
This letter, and the opinion expressed herein is addressed to, and for the information and
benefit of, the Board of Directors in connection with their evaluation of the proposed Merger. The issuance of this opinion has been approved by an Opinion Committee of Evercore Group L.L.C.
This opinion may not be disclosed, quoted, referred to or communicated (in whole or in part) to any third party for any purpose
whatsoever except with our prior written approval, except the Company may reproduce this opinion in full in any document that is required to be filed with the U.S. Securities and Exchange Commission and required to be mailed by the Company to its
stockholders relating to the Merger; provided, however, that all references to us or our opinion in any such document and the description or inclusion of our opinion therein shall be subject to our prior consent with respect to form and substance,
which consent shall not be unreasonably withheld or delayed.
Based upon and subject to the foregoing, it is our opinion that,
as of the date hereof, the Merger Consideration is fair, from a financial point of view, to the holders of the shares of Class A Common Stock (other than affiliates of the Company).
Very truly yours,
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EVERCORE GROUP L.L.C.
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By:
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/s/ Daniel B. Mendelow
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Daniel B. Mendelow
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Senior Managing Director
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S-K-3
W H I T E P R O X Y C A R D
YOUR VOTE IS IMPORTANT. PLEASE VOTE TODAY.
We encourage you to take advantage of Internet or telephone voting.
Both
are available 24 hours a day, 7 days a week.
Internet and telephone voting is available through 11:59 PM Eastern Time the
day prior to special meeting day.
VOTE BY INTERNET WWW.CESVOTE.COM
Use the Internet to transmit your voting instructions up until 11:59 P.M. Eastern Time the day prior to the special meeting date. Have your proxy card in hand when you access the web site and follow the
instructions to create an electronic voting instruction form.
OR
VOTE BY TELEPHONE 1-888-693-8683
Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day prior to the special meeting date. Have your
proxy card in hand when you call and then follow the instructions.
OR
VOTE BY MAIL
Mark, sign and date your
proxy card and return it in the postage-paid envelope we have provided to: Clearwire Corporation, c/o MacKenzie Partners, Inc., 105 Madison Avenue, New York, New York 10016.
If you vote your proxy by Internet or by telephone, you do NOT need to mail back your proxy card
Your Internet or telephone vote authorizes the named proxies to vote your shares in the same manner as if you marked, signed and returned your proxy card
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE SPECIAL MEETING: THE PROXY STATEMENT IS AVAILABLE AT
HTTP://WWW.VIEWOURMATERIAL.COM/CLWR
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If submitting a proxy by mail, please sign and date the card below and fold and detach card at perforation before mailing.
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PROXY CARD
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CLEARWIRE CORPORATION
THIS PROXY IS SOLICITED BY BOARD OF DIRECTORS
SPECIAL MEETING OF
STOCKHOLDERS
MAY 31, 2013
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The stockholder(s) hereby appoint(s) Erik E. Prusch, Broady R. Hodder and Hope F. Cochran, and each of them singly, as
proxies, each with the power to appoint their substitute, and hereby authorizes them to represent and to vote, as designated on the reverse side of this ballot, all of the shares of Class A Common Stock and/or Class B Common Stock of Clearwire
Corporation that the stockholder(s) is/are entitled to vote at the Special Meeting of stockholders of Clearwire Corporation to be held at 10:30 a.m. PDT on May 31, 2013, at the Highland Center, and any adjournments or postponements thereof.
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Signature
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Signature (Capacity)
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Date
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NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. If
stockholder is a corporation, please sign full corporate name by authorized officers, giving full title as such. If a partnership, please sign in partnership name by authorized person, giving full title as such
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Continued and to be signed on the reverse side
CLEARWIRE CORPORTION
SPECIAL MEETING OF STOCKHOLDERS
SIGN, DATE AND MAIL YOUR PROXY TODAY,
UNLESS YOU HAVE VOTED BY INTERNET
OR TELEPHONE.
IF YOU HAVE NOT VOTED BY INTERNET OR TELEPHONE, PLEASE DATE, MARK, SIGN AND RETURN THIS PROXY PROMPTLY.
YOUR VOTE, WHETHER BY INTERNET, MAIL OR TELEPHONE, MUST BE RECEIVED NO LATER THAN 11:59 P.M. EASTERN TIME THE DAY PRIOR TO THE SPECIAL MEETING TO BE INCLUDED IN THE VOTING RESULTS. ALL VALID PROXIES RECEIVED PRIOR TO THE MEETING WILL BE VOTED.
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If submitting a proxy by mail, please sign and date the card and fold and detach card at perforation before mailing.
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This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this
proxy will be voted in accordance with the Board of Directors recommendations to vote FOR proposals 1 through 5.
The Board of Directors
recommends you vote FOR Proposals 1 through 5.
1.
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Adoption of the Agreement and Plan of Merger, dated as of December 17, 2012, as amended from time to time, which we refer to as the Merger Agreement, by and among
Sprint Nextel Corporation, which we refer to as Sprint, Collie Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of Sprint, which we refer to as Merger Sub, and the Company.
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FOR
¨
AGAINST
¨
ABSTAIN
2.
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The approval of the Charter Amendment Proposal:
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2A:
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Amendment to the Companys amended and restated certificate of incorporation to increase the Companys authorized shares of Class A common stock, par
value $0.0001 per share, which we refer to as the Class A Common Stock, by 1,019,162,522 shares.
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FOR
¨
AGAINST
¨
ABSTAIN
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2B:
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Amendment to the Companys amended and restated certificate of incorporation to increase the Companys authorized shares of Class B common stock, par value
$0.0001 per share, which we refer to as the Class B Common stock, by 1,019,162,522 shares.
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FOR
¨
AGAINST
¨
ABSTAIN
3.
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The approval of the NASDAQ Authorization Proposal:
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3A:
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Authorization of the issuance of the Class A Common Stock that may be issued upon exchange of Clearwire Communications, LLCs and Clearwire Finance,
Inc.s 1.00% Exchangeable Notes due 2018, or issued upon the exchange of the Class B Interests issued upon exchange of the 1.00% Exchangeable Notes due 2018 in accordance with Rule 5635(d) of the NASDAQ Listing Rules.
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FOR
¨
AGAINST
¨
ABSTAIN
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3B:
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Authorization of the issuance of the Class B Common Stock that may be issued upon exchange of Clearwire Communications, LLCs and Clearwire Finance, Inc.s
1.00% Exchangeable Notes due 2018 in accordance with Rule 5635(d) of the NASDAQ Listing Rules.
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FOR
¨
AGAINST
¨
ABSTAIN
4.
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Adjournment of the Special Meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the Special Meeting to
approve the proposal to adopt the Merger Agreement, to amend the Certificate of Incorporation or to authorize the issuance of additional Class A Common Stock.
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FOR
¨
AGAINST
¨
ABSTAIN
5.
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Advisory approval vote on certain compensation arrangements for the Companys named executive officers in connection with the merger.
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FOR
¨
AGAINST
¨
ABSTAIN
Continued and to be signed on the reverse side
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