MetroPCS urges shareholders to approve T-Mobile USA deal

NEW YORK, March 12 (Reuters) - MetroPCS Communications Inc defended its proposed merger with T-Mobile USA in a letter to shareholders on Tuesday amid a proxy battle ahead of its April 12 shareholder meeting.

Two big shareholders have criticized the deal MetroPCS and the Deutsche Telekom unit announced in October due to its valuation of MetroPCS and the proposed $21 billion debt level of the combined company.

P. Schoenfeld Asset Management, which had a 1.66 percent stake in MetroPCS on Dec. 31, is leading a proxy battle against the merger. It has gained support from the company's top shareholder, Paulson & Co, which owns 9.9 percent of MetroPCS stock.

Btu MetroPCS said in its letter that the combined company's debt leverage would be in line with those of its peers and its own historical average.

Under the deal, Deutsche Telekom would end up with a 74 percent stake in the combined company, and MetroPCS would declare a 1-for-2 reverse stock split and pay $1.5 billion in cash to its shareholders.

Along with their concerns about the company's debt level, Schoenfeld and Paulson have also said the 26 percent ownership being offered to MetroPCS shareholders was not enough and that MetroPCS would be worth more as a stand-alone company.

But MetroPCS said the deal offered shareholders a 70 percent to 90 percent premium, including the net present value of projected cost savings from the merger.

The company also said the stock would be worth 19 percent less than the current price without the proposed $1.5 billion cash payment to shareholders.

MetroPCS shares were down 1.8 percent at $10.31 in morning trading.