By issuing notes to Sprint in exchange for $80 million of financing, Clearwire has, in effect, violated it's fiduciary responsibility to shareholders' interest. Because the notes are potentially exchangable into clearwire shares at $1.50 per share, clearwire has acted against both the interests, and the wishes, of the company's minority shareholders, as expressed by multiple communique's to the company by large minority shareholders.
In the absence of any significant attempt by the company to ascertain the magnitude of opposition to the Sprint takeover bid for the ridiculously low price of $2.97 per share, the company should at a minimum, consider the substantial press surrounding the overwhelming opposition to the sprint deal by minority shareholders and NOT provide Sprint with an avenue to obtaining clearwire shares for barely half of THAT price per share.
I would vigorously enjoin ANY class action lawsuit that is broght to bear against the board of Clearwire to seek contingent damages pursuant to this week's note issuance to Sprint and would recommend to all minority shareholder of this company to do likewise.
First of all, not sure what anyone is buying yet until the FCC rules on the issue that VZ raised. Remember, they did not object to the acquisition but questioned if CLWR spectrum had to comply with spectrum cap rules. Once that is settled, you will see more serious bids, but for now, how could you expect anyone to offer or increase their bid value if they do not know what they are buying? I think some are holding back till all this gets straightened out. It is possible that S walks away with a major swath of spectrum, but it is also possible they may up their bid after someone else ups/submits theirs and vice versa. Again, why would you expect anyone to start uping or submitting bids without knowing what they will be able to buy without constraints.
Yes, there are many unknowns, and I'm sure that's the reason why we won't see a raised bid from sprint near-term since they need more clarity, as you say.
The other complaints are the same way... no clarity. There is also the outstanding request that Intel's vote on sprint's ridiculous bid be recused since Intel is obviously a "control" shareholder given that it's business relationship with sprint dwarfs it's interest as a clearwire shareholder in magnitude. Sprint is obviously able to "buy" intel's vote with promises of future product purchases.
Certainly, clearwire should not be taking any heavily-dilutive loans from sprint if that undermines their ability to evaluate dish's offer in any kind of fiduciary way...
... and they have done exactly that.
I’ve heard in most cases shareholders end up getting practically nothing for their shares. The attorneys and “certain plaintiffs” seem to pocket the most leaving retail investors in the dust.
“Class members often receive little or no benefit from class actions. Examples cited for this include large fees for the attorneys, while leaving class members with coupons or other awards of little or no value; unjustified awards are made to certain plaintiffs at the expense of other class members; and confusing notices are published that prevent class members from being able to fully understand and effectively exercise their rights.”
Good Point, sunnybeach.
The CA industry has become one in which dozens of CA's are consummated with decent results for the attorneys with a relatively small amount available to damaged shareholders after the attorneys get their fees.
That said, a small percentage of them can end up being big deals with substantial proceeds to investors.
Suits against boards can also be tougher given the presumption of innocence inherent in a BOD given that the most prominant members of a BOD usually have interests in the company that are more or less aligned with "pure" (as opposed to "control") shareholders.
There's no way to guage how a CA or 2 would fare with clearwire... but it looks like there's likely going to be one or more CA's forthcoming.
Spok, The climate for class action lawsuits is, from my observation over the past few years, not that good. This is my guess based on the numbers of lawsuits filed and a vague measure of their success. It looks like CA activity has dropped off. I had talked with ca law firms, hot-shot attorneys who got involved in several cases including discussions about cases they were considering. In fact, I had brought a couple cases to the attention of firms which they ended up pursuing. They might have otherwise. ~15 years ago ca firms were more actively looking to start or join in on lawsuits. I do not think that is the climate now.
However, a first step it to join an existing lawsuit or find a ca law firm that can be encouraged to file a lawsuit. What would be the goals? The firm might figure that if the case is fair enough to be a nuisance and not be thrown out summarily, they can hold up the company for an out of court settlement. If the case if more substantial, they might wish to pursue it further.. beyond being a mere nuisance suit to a larger settlement.
I have my own assessment which you should not necessarily agree with: that is that there is slim hope for a large settlement that amounts to more than about $1 over the current offered price... and given the risk of achieving that is a questionable pursuit. However, I could be prejudiced by my own experiences and observations. Maybe its $2 or more. Then the rewards vs. risk for a ca law firm might look better... I have not talked to anyone and have no reason to pursue it... so don't know. I put that out here for your information. The 'system' is for all parties to avail themselves under the laws and common practices.. have the puck at it and make things work out. I am a 'little guy' and thing larger they are, the harder they should fall... within what can be pursued. Sprint, CW, SB have their positions which is to pursue business, not make me or you more happy than need be.
A class action lawsuit would look worth considering from your perspective imo. Over the past ~25 years, I have discussed class-action cases leading up to filings with the principles at CA law firms and with large shareholders. These discussions sometimes included formative discussions that basically poked around how the case would be constructed, ie. what the claim for damages would be based on given the circumstances. You should know enough to have realistic expectations by now. I have no economic interest in a class action and so my opinion may be pretty laid back. My opinion is that the case has some grounds that the value assessments that Clearwire BOD commissioned are prejudiced by the scope of information provided. For instance, Crest has put forward what will probably be included in their court claims that the assessment ignored spectrum that was valued at 40-70c/MHz-POP while other spectrum used might be less worthy of consideration. They also mentioned the statements that, while on one hand, Sprint-SB argue for the portions of the spectrum being less appropriate for use in mobile networks, on the other hand S-SB tout the potential for use of the large expanse of spectrum going forward to achieve the potential of the new company... which one might extrapolate out as being an essential, co-dependent element in overall success, thus pivotal to capturing several billions of dollars in future revenues and profits. However, that type of speculative claim becomes hard to prove in a court of law. I've been involved directly in a lawsuit that involved discounting of future business so have direct understanding of how the courts look at this. I've also studied the law .. thought about becoming a lawyer at one point.
I believe a CA was inevitable anyway... and so does CLWR's board on the basis of the way they've been behaving in a general sense.
The basis of my lead post above was borne out of a basic conflict of interest that exists currently. On the one hand, CLWR's board is "actively" looking into and considering the dish bid for clearwire. On the other hand, they have just accepted a securitized loan from Sprint that directly damages the efficacy of the dish bid... even before they have rendered any sort of an opinion on it.
I hate to say it, because I had a lot of respect for Stanton and Prusch before this whole hairball got going, but they've been going about this as though they have no concern at all for the rights of shareholders to be impartially represented by the clearwire board. They're inviting CA and the largest minority shareholders appear locked and loaded in that regard.
When you add in the other complaints... such as softbank controlling more spectrum than verizon and AT&T combined... and Intel's status as a quasi "control" shareholder... there's nothing about this that's going to be settled anytime soon for less than $3.30 a share.