UPDATE 1-Mount Kellett urges Clearwire to push for better deal
Jan 16 (Reuters) - Clearwire Corp shareholder Mount Kellett complained that Sprint Nextel Corp's offer to buy out the company was "grossly inadequate" and said Clearwire's special committee had breached its fiduciary duties in accepting the offer.
Mount Kellett, a holder of roughly 7.3 percent of Clearwire shares, also said in an open letter to Clearwire on Wednesday that Sprint's Dec. 17 bid to buy Clearwire for $2.2 billion, or $2.97 per share, would likely be voted down.
Sprint, which already owns just over 50 percent of Clearwire shares, needs approval from a majority of Clearwire's minority shareholders for the proposed buy-out to succeed. The deal has also been publicly rejected by another shareholder Crest Financial, which holds roughly 8.34 percent of Clearwire shares.
Mount Kellett, an activist investment firm, urged Clearwire's special committee to negotiate for improvements in an offer Dish Network Corp announced on Jan. 8 to buy Clearwire for $2.3 billion, or $3.30 per share, and said the Dish offer "provided further evidence" the committee had failed in its duty to shareholders.
As part of the Sprint deal, Sprint plans to provide Clearwire with up to $800 million of financing, which would be exchangeable for Clearwire common stock at $1.50 per share, with the purchase of $80 million of exchangeable notes per month for up to 10 months beginning in January.
Clearwire did not draw on the initial $80 million financing because it said its special committee was reviewing the Dish offer.
But the investor criticized Clearwire's special committee for agreeing to the Sprint financing in the first place and accused it of failing to "adequately explore other financing alternatives" to the Sprint offer, which it described as "highly coercive and highly dilutive."
Sprint had responded to the Dish offer by saying that it was not viable because of certain conditions required by the satellite television.
Mount Kellett urged the Clearwire committee to thoroughly evaluate the Dish proposal "including how to address certain obstacles to consummating the proposal asserted by Sprint."
Clearwire shares were down 4 cents, or more than 1 percent, at $3.14 in afternoon trade on Nasdaq and Sprint shares were down 9 cents, or 1.6 percent, at $5.53 on the New York Stock Exchange after the shareholder letter was made public.