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Sprint (S) Looks to Acquire Clearwire (CLWR) for $2.90/Share

December 13, 2012 6:19 AM EST Send to a Friend
Sprint Nextel (NYSE: S) seeks to buy rest of Clearwire (Nasdaq: CLWR) for $2.90 per share.

From an amended 13D filed this morning:

On October 11, 2012, BHN Spectrum provided Clearwire and Clearwire Communications with a written notice of its request to exchange all of the shares of Class B Common Stock together with all of the Clearwire Communications Class B Common Interests held by BHN Spectrum into an equal number of shares of Class A Common Stock (the “BHN Exchange”). The BHN Exchange was completed on October 18, 2012.

Item 4 of the Prior Joint Schedule 13D is amended and supplemented by adding the following information under a new heading “Closing of ERH Transaction”:

On December 7, 2012, all of the conditions to the transactions contemplated by the ERH ROFO Notice and Sprint Response Notice (the “ERH Transaction”) were met and, on December 11, 2012, ERH and the Sprint Entities consummated the ERH Transaction. The Interests were purchased by SN UHC 1, an indirect wholly-owned subsidiary of Sprint and, thus, a permitted designee of Sprint HoldCo under the Equityholders’ Agreement and Operating Agreement, pursuant to an election exercised by Sprint HoldCo pursuant to a notice (the “Election Letter”) and assignment and assumption agreements (the “Assignment and Assumption Agreements”) delivered to Clearwire in accordance with the terms of the Equityholders’ Agreement. ERH continues to hold certain warrants, which, upon the exercise thereof, entitle the holder to receive 375,000 shares of Class A Common Stock.

As a result of the ERH Transaction, according to the terms of the Equityholders’ Agreement described in Item 6 of the Schedule 13D, ERH no longer has the right to elect a director of Clearwire, and may no longer be deemed a member of the “group” under Section13(d) of the Act with the Sprint Entities, the Comcast Entities, the BHN Entities and the Intel Entities, as more fully described in Item 5(a)-(b) of the Schedule 13D.

The summary above is qualified in its entirety by reference to the Election Letter and Assignment and Assumption Agreements, attached as Exhibits 99.47- 99.49, which are incorporated by reference herein.

Item 4 of the Prior Joint Schedule 13D is amended and supplemented by adding the following information under a new heading “Sprint Transaction Proposal”:

On December 12, 2012, the Board of Directors of Sprint authorized Sprint’s management to proceed with discussions with Clearwire with the intent to attempt to reach a definitive agreement for a potential merger transaction (the “Proposed Transaction”). Representatives of Sprint have proposed certain terms (the “Sprint Proposal”) for the Proposed Transaction, as described below. Sprint understands that the Board of Directors of Clearwire has formed a special committee comprised of disinterested directors (the “Special Committee”) that is reviewing the Proposed Transaction. No assurances can be given that Sprint and Clearwire will reach agreement on the terms of a Proposed Transaction, that the terms of the Sprint Proposal described below (including but not limited to the terms related to the proposed purchase price per share) will not change, that definitive agreements for a Proposed Transaction will be entered into, or that a transaction will be consummated.

Pursuant to the Sprint Proposal, Sprint would acquire all of the shares of Common Stock and Clearwire Communications Class B Common Interests not already owned by the Sprint Entities (the “Shares”) at a purchase price of $2.90 per share (the “Purchase Price”) of Class A Common Stock and Class B Common Stock (together with the corresponding Clearwire Communications Class B Common Interests) in cash. Sprint has proposed to provide interim financing to Clearwire from and after the execution of definitive.

documentation relating to the Proposed Transaction in an amount up to $800 million (the “Interim Financing”). The Interim Financing is proposed to be provided in monthly installments through Sprint’s purchase of exchangeable notes (the “Notes”) from Clearwire Communications and Clearwire Finance, Inc. The Notes would be exchangeable for Class B Common Stock (together with corresponding Clearwire Communications Class B Common Interests) on terms to be agreed upon by Sprint and Clearwire. The availability of the full amount of the Interim Financing would depend, among other things, on the receipt of required Clearwire stockholder approvals for the Proposed Transaction and network buildout requirements to be agreed upon by Sprint and Clearwire.

Sprint has provided the Sprint Proposal to SOFTBANK CORP. (“SoftBank”) for its review. Pursuant to the terms of the Agreement and Plan of Merger, dated as of October 15, 2012, entered into by and among Sprint, SoftBank, Starburst II (“Parent”) and the other parties thereto (as amended, the “SoftBank Merger Agreement”), Sprint is required to obtain the prior written consent of Parent for the Proposed Transaction before entering into definitive documentation. Sprint anticipates that a definitive merger agreement entered into by Sprint and Clearwire in connection with the Proposed Transaction would contain, as a condition to consummating the Proposed Transaction, a requirement that the transactions contemplated by the SoftBank Merger Agreement (the “SoftBank Transaction”) will have first been consummated. The Proposed Transaction is intended to qualify as a “Qualifying Purchase” under the Equityholders’ Agreement and thus will also require approval by a majority of the directors on the Board of Directors of Clearwire (excluding Sprint’s designees) and by holders of a majority of the voting power represented by Clearwire’s voting securities (excluding the voting securities held by the Sprint Entities).

Under the terms of the Sprint Proposal, each of Comcast, the BHN Entities and the Intel Entities would enter into a voting and support agreement with Clearwire with respect to the Proposed Transaction, which will provide that such Equityholders will vote (i) all voting shares of Clearwire owned by such Equityholders in favor of adopting the definitive merger agreement and approving the transactions contemplated thereby and (ii) against other acquisition proposals. These voting obligations would apply whether or not the Proposed Transaction is recommended by the Board of Directors of Clearwire. The voting and support agreement would also provide that such Equityholders would provide any waivers and consents needed to effectuate the Proposed Transaction.

In addition, the Sprint Proposal provides that (i) Clearwire would agree to the termination of the Equityholders’ Agreement upon consummation of the Proposed Transaction and (ii) if a definitive merger agreement is executed in connection with the Proposed Transaction and such agreement is terminated due to the failure of the Clearwire stockholders to approve the Proposed Transaction, each of Comcast, the BHN Entities and the Intel Entities would agree (a) that each such entity will deliver a right of first offer notice (the “Notice”) to the other Equityholders pursuant to Section 3.3 of the Equityholders’ Agreement to offer to sell all of the equity securities of Clearwire and Clearwire Communications such entity owns at a price per share equal to the Purchase Price, (b) that Sprint will be entitled, but not obligated, to elect to purchase any such equity securities in any such Notice, and (c) that none of Comcast, the BHN Entities or the Intel Entities will exercise its purchase rights with respect to any such Notice it receives from the other entities under the Equityholders’ Agreement.

No binding obligation on the part of Clearwire or the Sprint Entities will arise with respect to the Proposed Transaction unless and until such time as definitive documentation is (i) approved by the Board of Directors of Sprint, (ii) recommended by the Special Committee and approved by the Board of Directors of Clearwire, (iii) consented to by Parent, and (iv) executed and delivered by the parties. Sprint reserves the right to modify the terms of the Sprint Proposal or withdraw the Sprint Proposal at any time.

If the Proposed Transaction is effected, it would result in one or more of the actions specified in clauses (a) through (j) of Item 4 of Schedule 13D, including, without limitation, the acquisition of additional securities of Clearwire, a merger or other extraordinary transaction involving Clearwire, the delisting of the Class A Common Stock from NASDAQ and the Class A Common Stock becoming eligible for termination from registration pursuant to Section 12(b) of the Act.




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