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--Deutsche Telekom not considering altering bid for MetroPCS
--Counters report that a sweetened deal is being assessed
--Opponents continue campaign to vote down the deal
By Archibald Preuschat and Thomas Gryta
Deutsche Telekom AG (DTEGY DTE.XE) Thursday said its T-Mobile
USA unit is currently not considering a more attractive deal for
U.S.-based MetroPCS Communications Inc. (PCS), just as a vocal
opponent of the deal reiterated its argument for better terms.
Speaking to Dow Jones via telephone, Deutsche Telekom spokesman
Philipp Kornstadt denied a Reuters report that the German company
is considering sweetening the terms but noted that a final decision
hadn't yet been made.
A shareholder vote on the deal is set for April 12. Some major
investors are opposing the terms and two proxy adviser firms have
recommended MetroPCS shareholders vote against the proposal, in
which they get about $4 a share in cash and a 26% stake in the
newly merged company.
Speculation has swirled that Deutsche Telekom would alter the
structure since the influential advisory firm Institutional
Shareholder Services Inc. said last week that it considered the
terms unfavorable for shareholders.
The complexity of the current terms, involving a stake in a
private company and substantial debt to Deutsche Telekom, could
leave several options for an altered deal or potentially an
entirely new structure.
The prospect of a failed vote leaves Deutsche Telekom with
another unsuccessful deal just 15 months after its effort to sell
T-Mobile USA to AT&T Inc. (T) for $39 billion fell apart under
regulatory pressure.
Two major MetroPCS shareholders--P. Schoenfeld Asset Management
and Paulson & Co.--have been vocal about opposing the deal and
arguing for better terms or remaining independent.
The two funds own more than 12% of MetroPCS shares and say the
structure of the transaction will give investors stock in an
under-capitalized company and a high interest rate on excessive
debt, all while trying to revive itself in a competitive
industry.
P. Schoenfeld Asset Management held a conference call for
investors Thursday, reiterating those arguments. It said MetroPCS's
standalone value, as well as the sum of assets, provide a better
deal for the company's shareholders.
The fund criticized the deal as complex and said Deutsche
Telekom has a conflict of interest because it will be both the
largest creditor and shareholder while controlling the new
company's board. If the deal is voted down, P. Schoenfeld Asset
Management said it could push to replace MetroPCS' board next year
if the directors aren't showing the required leadership.
T-Mobile has defended the terms of the deal and contended that
the transaction will succeed in getting shareholder approval.
Write to Archibald Preuschat at archibald.preuschat@dowjones.com
and Thomas Gryta at thomas.gryta@dowjones.com
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