HOUSTON, June 6, 2013 /PRNewswire/ -- Crest Financial
Limited, the largest of the independent minority stockholders of
Clearwire Corporation (NASDAQ: CLWR), sent a letter to Clearwire's
Board of Directors criticizing Sprint Nextel Corporation's
objections to DISH Network Corporation's $4.40 per share tender offer for all outstanding
Clearwire shares. Crest agreed with DISH's responses to
Sprint's letter, which it says was "fraught with unfounded
assertions." Crest again urged the Clearwire Board to appoint
a new Special Committee with new directors to fully consider DISH's
tender offer and pursue a competitive bidding process to "unlock
the Company's true value for Clearwire's stockholders."
In Crest's letter to the Clearwire Board, David K. Schumacher, Crest's General Counsel,
states: "We recognize Sprint's letter for what it is:
Sprint's latest attempt to interfere with your consideration of
alternatives that will benefit all stockholders, rather than just
Sprint. We are convinced that DISH's tender offer, and your
entering into the Investor Rights Agreement and the Note Purchase
Agreement proposed by DISH, will not violate the Company's
contractual obligations or the law. And failure to consider
DISH's offer would be a breach of your own fiduciary duties.
In its June 4 letter, DISH directly
rebutted the untrue, overbearing assertions in Sprint's
letter. As Clearwire's largest independent minority
stockholder, we write this letter to add our own views."
According to Schumacher: "DISH's request for nomination
rights is not problematic. The [Equityholder's Agreement
('EHA')] does not bar the Board or its nominating committee from
agreeing to nominate DISH's designees to the Board. The EHA
states only that the nominating committee will fill unreserved
seats, which it of course would be doing when it nominates DISH's
designees. And DISH's proposal would not require a reduction
to Sprint's nomination rights. Nor does Delaware law prohibit the Company, with
approval of the Board, from entering into an agreement with a
stockholder to nominate certain directors through its nominating
committee. Sprint's suggestion that the agreement is unlawful
because it continues 'in perpetuity' is wholly unfounded.
Sprint's own nominating rights are 'not time-bound,' and Sprint has
made no effort to distinguish its rights from DISH's
proposal. We also do not see any fiduciary duty concerns in
this context since DISH covenants to nominate only independent
directors (as defined by the NASDAQ listing rules). That
said, any concerns you may have could easily be addressed by a
'fiduciary out' provision. Such a provision would give the
Board's nominating committee the right to reject a candidate to the
extent the committee determines in good faith and on advice of
outside counsel that the candidates nomination would violate the
directors' fiduciary duties."
Schumacher adds: "The veto rights in DISH's proposed
Investor Rights Agreement are commonplace and permissible.
Merger agreements, stock purchase agreements, investor agreements,
credit agreements, indentures, and many other legal instruments
regularly include negative covenants of the kind DISH requested, as
Sprint well knows. Neither Delaware law nor Clearwire's
Certificate of Incorporation prohibit Clearwire from granting
pre-emptive rights by contract, and that is all that DISH has
requested. Finally, DISH's status as a minority stockholder
does not magically render these covenants unlawful—as is evident
from the rights already granted to non-Sprint minority stockholders
under the EHA."
Crest's letter goes on: "Likewise, we do not read the DISH
tender offer to require Sprint's consent. The EHA requires
consent of the parties only for 'material capital restructuring or
reorganization' of Clearwire. Given that Clearwire is a
company with an enterprise value of at least $11.39 billion
(assuming a share price of $4.40 for
the equity of Clearwire), no one can seriously claim that accepting
DISH's $800 million financing proposal amounts to a
'material capital restructuring or reorganization.'
Similarly, the EHA does not mandate consent for tender offers but
expressly requires consent only for any 'merger, consolidation,
share exchange, recapitalization, business combination or other
similar transaction involving the Company.' The nine EHA
parties and their fine lawyers did not simply forget to include in
this litany a 'tender offer,' even though it is among the most
common transaction structures. Rather, the real and sensible
reason why tender offers are not included in the consent list is
because a tender offer is not a transaction involving the
Company—it is a transaction directly between a bidder, here DISH,
and the stockholders. In all events, it is difficult to see
how a 'change of control' can possibly occur so long as Sprint
persists in its refusal to sell its Clearwire shares."
Schumacher further explains: "Although we agree with DISH that
Sprint's objections are unsubstantiated and its position
unsustainable, the burden on your decision is more modest.
DISH's offer is conditioned not on the illegality of Sprint's
objections, but only on your agreement to the proposed Investor
Rights Agreement and Note Purchase Agreement. Thus, DISH is
willing to take on the entire litigation risk and has not
conditioned its tender offer on the absence or failure of any
challenge by Sprint. It merely requires the Board to agree,
but does not ask Clearwire to guarantee that these
agreements will survive a legal challenge unscathed."
Crest's letter continues: "Contrary to its public
handwringing, no one is asking Sprint to engage in
'self-sacrifice.' Indeed, Sprint's recitation of Clearwire's
formation, the details of the EHA, and the particular contractual
rights it thinks it holds are a distraction from the real
issue—Sprint's persistent breaches of its fiduciary duties.
As we have been explaining for months, we believe that Sprint is
attempting to snatch up Clearwire on the cheap, at a price that
grossly undervalues the Company and is unfair to minority
stockholders. Sprint's letter threatening to 'enforce'
supposed 'rights' is just a last-ditch effort to preserve an unfair
process and an unfair price, in order to divert the Company's true
value entirely to itself."
Schumacher further states: "Sprint of course has the right not
to sell its shares. But it has not stopped simply at stating
its intention not to sell. Instead, Sprint has taken every
step possible, and using every ounce of leverage as controlling
shareholder, to thwart any effort to benefit the Company and its
minority stockholders—even to the point of threatening litigation
to deny Clearwire stockholders the voluntary choice of realizing at
least $1.00 per share more than
Sprint's coercive merger proposal. If Sprint truly thinks
that Clearwire is worth only its original offer price of
$2.97 or its latest offer of
$3.40 per share, then Sprint should
be selling its shares of the Company for $4.40 or any higher price. But it has taken
precisely the opposite approach. Sprint has publicly stated
that it does not intend to sell and has continued wielding its
oppressive powers as Clearwire's controlling stockholder in an
attempt to sink all competing bids and ram through its own
undervalued offer."
According to Schumacher: "In the end, Sprint's letter is perhaps
most telling in what it does not say. Sprint makes no attempt
to explain how its current offer of $3.40 can possibly be fair to minority
stockholders while DISH is offering $4.40 per share. In fact, Sprint makes no
attempt to explain how its offer is superior to DISH's in any way
at all. That of course is because it is not. Sprint's
offer attempts to squeeze-out Clearwire's minority stockholders at
an unfair price, while DISH's tender offer would not force anyone
to sell against their will. It seeks to push through the
unfair deal by packing the 'minority' vote with interested parties
who have already pledged to vote in favor of the merger and to sell
their shares to Sprint even if the merger is rejected, along with
directors, officers, and employees with golden parachutes and
compensation awards that encourage them to vote for the
merger. And it imposes a coercive and highly dilutive Note
Purchase Agreement, with much worse terms than DISH's financing
proposal and Crest's own financing offer."
The letter to the Clearwire Board concludes: "It is time
for you, the Clearwire Board, to fulfill your own fiduciary duties
to the Company's minority stockholders by resisting Sprint's latest
outrage. DISH's offer is clearly actionable, and you have an
obligation to give it full consideration. To the extent you
are concerned with any of its details, those concerns can be
resolved through good faith negotiations with DISH. As we
urged in our June 3 letter,
consideration of the DISH tender offer and any other alternatives
to Sprint should be considered by a new Special Committee with new,
truly independent directors who are not tainted by the current
Special Committee's past misjudgments. To be sure, DISH's
current proposal might not prove to be Clearwire's best offer in
the end. But it is a direct offer for the Company that
furthers the competitive bidding process that we believe can unlock
the Company's true value for Clearwire's stockholders. It is
your duty to take full advantage of this opportunity to pursue fair
value for all of Clearwire's stockholders."
D.F. King & Co, Inc. has been
retained by Crest to assist it in the solicitation of proxies in
opposition to the proposed Sprint-Clearwire merger. If stockholders
have any questions or need assistance in voting the GOLD proxy
card, please call D.F. King &
Co. at (800) 949-2583. The full letter to the Clearwire Board can
be found at http://www.dfking.com/clwr or
http://www.bancroftpllc.com/crest.
About Crest Financial Limited
Crest Financial Limited
("Crest") is a limited partnership under the laws of the
State of Texas. Its principal
business is investing in securities.
Important Legal Information
In connection with the
proposed merger of Clearwire Corporation ("Clearwire") with Sprint
Nextel Corporation (the "Proposed Sprint Merger"), Crest and other
persons (the "Participants") have filed a supplement to its
definitive proxy statement with the U.S. Securities and Exchange
Commission ("SEC"). The definitive proxy statement and the
supplement have been mailed to the stockholders of Clearwire.
SECURITYHOLDERS OF CLEARWIRE ARE URGED TO READ THE DEFINITIVE PROXY
STATEMENT AND THE SUPPLEMENT, WHICH ARE AVAILABLE NOW, AND THE
PARTICIPANTS' OTHER PROXY MATERIALS FILED WITH THE SEC WHEN THEY
BECOME AVAILABLE, BECAUSE THEY CONTAIN IMPORTANT INFORMATION,
INCLUDING ADDITIONAL INFORMATION RELATED TO THE PARTICIPANTS,
CLEARWIRE AND THE PROPOSED SPRINT MERGER. The definitive proxy
statement, the supplement and all other proxy materials filed with
the SEC are available at no charge on the SEC's website at
http://www.sec.gov. In addition, the definitive proxy
statement and the supplement are also available at no charge on the
website of the Participants' proxy solicitor at
http://www.dfking.com/clwr.
Forward-looking Statements
Certain statements
contained herein are forward-looking statements including, but not
limited to, statements that are predications of or indicate future
events, trends, plans or objectives. Undue reliance should not
be placed on such statements because, by their nature, they are
subject to known and unknown risks and
uncertainties. Forward-looking statements are not guarantees
of future activities and are subject to many risks and
uncertainties. Due to such risks and uncertainties, actual
events may differ materially from those reflected or contemplated
in such forward-looking statements. Forward-looking statements
can be identified by the use of the future tense or other
forward-looking words such as "believe," "expect," "anticipate,"
"intend," "plan," "should," "may," "will," believes," "continue,"
"strategy," "position" or the negative of those terms or other
variations of them or by comparable terminology.
SOURCE Crest Financial Limited