i like the idea of sprint getting nothing but a 4.5 billion dollar debt. By by to the 80 million dollar payments, bye bye to the spectrum, bye bye softbank, Hello 4.5 billion dollar debt.
We have agreed and dsiagreed, been silly and not so silly for some time now, but it appears things will actually come to a head in the next few months. Regardless of either of our positions on this (by the way I hope SB-S can be a good competitor for T & VZ, just not at CLEAR's current shareholder expense), we should be happy of that.
Clearwire has agreed to be acquired by Sprint-SB - that includes the debt so you can write that off as 'in there'. In all likelihood Sprint-SB will not allow CW to go into bankruptcy and the timing for that to occur makes it doubtful. The debt issue coming front and center, therefore, works more to pressure and raise awareness among shareholders than it does to impact Sprint imo.
I actually think Clearwire intends to default as part of the game plan that was setup with Softbank+Sprint+Clearwire, and now it's in play. Case in point, Softbank recently issued bonds to further fortify its cash position. As a precautionary step and fiduciary duty Clearwire has already informed investors of its possible financial restructuring (bankruptcy proceeding) from a default and this now seems more like an “intent” than option.
The question is what would happen if Cleawire is to default. Well, first of all Sprint currently owns 53% of Clearwire (possibly more due to the Partner’s shares) and that would make Cleawire a subsidiary of Sprint, which means Sprint may be responsible for Clearwire $4.3B debt.
As part of the game plan, Softbank and Sprint will exercise their rights and acquire Clearwire's debt as a parent company. At this point, the debt is still being collateralized with Clearwire’s spectrum asset. Upon owning Clearwire’s debt Softbank-Sprint will force Clearwire into a bankruptcy immediately by withholding funds and any sale of Clearwire spectrum would still require Sprint (majority owner) and bondholders' (Softbank-Sprint) approval. What it boils down to is that Softbank/Sprint will get hold of the entire Clearwire's spectrum asset for $4.3B and investors will perhaps get $0.
I think this is a brilliant plan, perhaps devious.
you will get your Wish cause if you remember Sprint lower their control to 48% a few yrs ago to keep this from happening but this time the game changes since the Sharks are closing the circle and Sprint can n't afford to lose the majority ownership now.
It would not shock me to find out Old Google Eyes are also watching. I think Sprint is backed deep in a corner this time with their low offer and the way some major investors and the common share holders fell and the way they may vote.Not to mention the funding offers that has came forward from others and the lawsuits that has been filed by Crest even if it takes awhile to hit the Courts there will be questions asked that Sprint or Clear wire will not like answering.
By the way to clear the air here I own and I am also long on both these companies so at the very least I hope to still break even if I don't see a profit.
just remember, this is shaping up to be a battle of "us" (minority holdout shareholders) versus "them" (CLWR mgmt and S/ SB), I don't see mgmt doing ANYTHING from this point forward that puts the Sprint transaction in jeopardy--they are puppeteers of Sprint now, not representatives of CLWR shareholders (only Sprint). And they also want their payday, millionaires they will be if the deal closes, why would they even
CONSIDER a new bid?? And why did we only learn of the new offer for spectrum today, April 12th when the offer was made on April 8th? Answer- Daddy Sprint told them to squash the news until late Friday so they could control the stock price, which would have been harder to do earlier in the week with a few trading days to deal with.
This "deal" is really starting to reek of collusion, delusion, and fraud. That's why I feel Crest must push for an SEC investigation into Clearwire's complicity with S/SB and their blatant disregard for fiduciary duty to ALL shareholders.....STANTON WHERE ARE YOU??? "MR. TELECOM DEAL-MAKER EXTRAORDINAIRE" (supposedly) SHOW YOURSELF IN PUBLIC AND EXPLAIN TO THE SHAREHOLDERS WHAT IS GOING ON.... up to now you've been a faceless pawn in this whole process instead of a LEADER who has a backbone to explain in public the position the company has taken, and the reasons WHY......how about growing one Stanton??
Mr Stanton and Mr McCaw are veteran's in this industry. They know full well the pro's and con's here. Mr Stanton is the dealmaker's dealmaker....don't count him out just yet...,but I do agree with one aspect of your post...why did clwr wait until late on a Fri to break this news? Were they unsure of how the Mkt's would digest the news? The political spin doctor's course 101 suggests that bad news goes into a news cycle late on a Fri and good news goes public Tues-Weds before Mkt's open...we'll just have to see how this plays out. One thing for sure, the real value of Clwr continues to be brought out and the Crest team will continue to press harder for what they believe is fair market value for there investment. the drama continues.....
“NEW YORK/SAN FRANCISCO (Reuters) - Clearwire Corp is "actively considering" defaulting on a $255 million interest payment due June 1 on about $4.5 billion of outstanding debt, according to a proxy filing on Friday, as a shareholder vote approaches on Sprint-Nextel Corp's takeover offer.
The company, which urged investors to vote in favor of Sprint's buyout offer, warned that failure to close a deal may force it to contemplate a financial restructuring, which in turn could entail filing for bankruptcy.”
This is the ACE that will be played against minority holdouts.
Either you vote for $2.97 (most kind and gracious offer!) or your stock will be worth perhaps $0 (nothing left) in a bankruptcy settlement after the pecking order given to first-lien creditors, IRS, regulators, and employees.
In my humble opinion.
People are over thinking this. IMO, it's a CLWR ploy to get S to raise its offer to avoid the bk process. CLWR did this once before. Remember when Dan said he did not care if CLWR bk'd? CLWR called his bluff. Also, a bk puts S farther behind T&VZ's as the bk slows Sprint's 4 LTE network upgrades by sapping money from S via its activist 51% ownership, CLWR's debt possibly ending up on Sprint's books, legal fees and wasted time. Any slowdown in Sprint's network upgrade causes S to lose customers. Time delays favor CLWR.
That is the gambit. This has been a complicit thing hanging out there: "Either we go along with Sprint-SB deal or we go bankrupt" has been the message for months. The 'We may hold off paying the debt payments' its not so cool.. its rich-boys with OPM, other people's money, toys, "If we do not get our way, we will neglect to pay and will let the house of cards we helped erect come crashing down on you.. as we walk away with out millions." Its disgusting snagglepus.. but that is the cartoon-like risk for your money stock game.
Why hasn't Softbank-Sprint structured the deal as a stock option in New Sprint or in a new vested entity? Son has done deals in which companies were acquired but due to the nature of the business, to keep motivations high, they kept the entity with its own trading stock. Why not something in tone with that.. why such a hard#$%$ way of going about this? After all, this company played a high risk game, partly fulfilled with flacky promises "We have 160MHz, 40MHz wide bands.. we are unstoppable!" Wrong-way wing riders. Well, it doesn't matter what I think is fair.. "truth to power" doesn't work all the time.
The risk is real: in the end if CW went BK debt holders would call in, Sprint-SB would be in line to pick up the pieces, current shareholder would be left in the cold. Although it might look like S is in the same boat, that is not at all the case.
Think straight about this: The proxy will go out to shareholder of record from Clearwire that poses a situation the is quite dire. I have been saying its a done deal. Clearwire has agreed to not accepting other financing or to sale of spectrum.. as outlined int eh 14A.. however that has already been what they had agreed to prior. Regardless and coming far before that, Clearwire has been effectively 'owned' by Sprint by virtue outright ownership and degree of business and financial dependency and rights to use among the best portions of the spectrum. That has been 'baked into the cake' and tightening since Clearwire was formed. It is what you agreed to buy when you bought the stock.
So? The situation is that shareholders are along for the ride, rendered almost powerless and, according the Clearwire, may not see any value if the deal is not approved. However, that puts you in the position, along with Crest and others, to play the cards that are dealt: your option is either to accept the offer at $2.97 or hold up the deal for a higher price/ There is no 'right or wrong morals' part of this equation, its simple rights and greed vs. corporate rights and greed. I simply analyze and advise: as such it makes sense to play your cards and hold out for a better offer.
The risk is that Clearwire will play out the debt situation: refusing to pay the interest on the debt might force debtors hands, however complicit that might be, to move towards foreclosure on the debt. That is unlikely to move forward due to timing, however, if it did the debt holders will get paid before shareholders. Financial analysts, Mt. Kellett and other fund owners may well decide its not worth the risk. The mention that Clearwire BOD has considered this amounts to a rumor... a flagrant waving of the surrender flag.
well, teamrep, you can do the math. Sell all the spectrum and leases, pay off the debt, give Sprint it 50.1% and the shareholders get the remaining 6.00 a share and turn out the lights. I'll take it.
The one thing I have learned is to never expect the obvious reaction to be the correct one in this market. It is corrupt and belligerent. The stock shot up after hours and no one was spooked by the threat of default.
Sprint is turning down legitimate offers. The Court will side with shareholders as the proxy has already indicated that Sprint has failed to act in good faith as a majority shareholder with opportunities that will directly benefit the company.
Sentiment: Strong Buy