Clearwire (CLWR) Could Be Worth More Than $19/Sh in Liquidation

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While the bullish call on Clearwire (NASDAQ: CLWR) from JANCO Partners is admittedly "the single worst recommendation, thus far, in our career," they are sticking with the stock and reminding readers that Clearwire "is the largest spectrum holder in the US." Exploding mobile broadband demand is the key factor keeping them enthusiastic.

Looking at the current situation, JANCO estimates the company has sufficient capital to make it through phase 1 of its LTE build commitments to Sprint (NYSE: S) but not much more. Hence, they expect a capital raise through: 1. a customer agreement with prepayment features or sufficient terms to be discounted or to serve as collateral for an asset backed loan; 2. possible sale of spectrum within the structure of a customer or other strategic relationship.

The firm does not think capital will come from Sprint, equity offerings, bond issuance, or an outright or discrete spectrum sale.

JANCO commends management for "an outstanding job marshalling and conserving cash which may give Clearwire more of a cushion than most expect."

The firm also said a liquidation may be in shareholders best interest. "Should management not raise capital within the next 10 months, we believe the company’s best course for its shareholders and lenders would be liquidation which we estimate that the proceeds would far exceed the current share price," the firm said.

Applying recently closed spectrum transaction prices to Clearwire's spectrum portfolio results in a per share valuation ranging from $2.77 to more than $19.00, the firm said.

JANCO maintained their Buy rating and target of $2.75 near term, and $8 longer term.

For an analyst ratings summary and ratings history on Clearwire click here. For more ratings news on Clearwire click here.

Shares of Clearwire closed at $1.68 yesterday, with a 52 week range of $0.83-$3.50.

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