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Clearwire Corporation (CLWRD) Message Board

  • accugrowth accugrowth Apr 16, 2013 9:48 PM Flag

    Dish ACE in Hole?

    The CLWR statement that they might not pay the June 1 interest on their debt was strange. Then, I remembered that DISH may own a hunk of CLWR bonds. It seems to me that those shares are convertible into voting shares under certain situations.

    If DISH gets to vote on the S takeover of CLWR, then they have a bargaining chip with S that Softbank does not have.

    This may not be good news for CLWR shareholders though. S might come to an agreement with DISH that lets the $2.97 offer for CLWR stand.

    This is poker, not investing.

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    • The risk of BK is like the roar of the lion in Wizard of Oz - even though a lion, its extremely unlikely that the roar will result in a bite that takes the head off of Sprint.

      A lot is being made of DISH's ownership of Clearwire debt. Its true this looks like a clever strategic move. However, I've seen figures for DISH's ownership that range from $750 to $900 million out of about $4.5 billion total. Unless they have acquired much more of that debt, keeping in mind that Sprint is loaning more monthly and Clearwire itself cannot approve new debt without S's approval, how do claims that DISH garners control through CW debt or can buy the company if it goes BK pass the "Hype Test"?

      • 1 Reply to teamrep
      • Sorry TeamRep, I like my metaphor better. DISH seems to have an ACE, not the bite of a lion.

        Some posters on this board think that DISH might help push the CLWR offer price higher. However, DISH is now are on the S side of the table (as a potential owner). DISH does not want to pay any more than they need to pay for CLWR.

        I do not know how this poker game is going to play out. However, retail CLWR investors do not seem to have any Goliths on their side. Crest does not seem to be playing the role of David; they are out for themselves only.

    • I’m seeing a different angle to this. If DISH holds the 2010 exchangeable notes, Charlie could convert them to shares and block a buyout. But he wouldn’t want to convert the debt if Clearwire was going to default, so they said they made that threat in the proxy. But if he makes an agreement with Sprint it wouldn’t matter because his shares would become part of the controlling majority. So he can’t promise to deliver Clearwire at Sprint’s buyout offer, but he can block Sprint if they don’t give him a piece of the pie.

    • I consider the purchase and sale of any individual stock to be gambling. And in this case it definitely has become a strange mix between a poker game and a multiple player chess game, in which we are the merely the small particles that make up the pawns or cards known as the minority shareholders.

      I was thinking how Charlie has Clearwire surrounded with debt holdings, an offer for spectrum, an offer Clearwire, and now an offer for Sprint. So I began to wonder if he had purchased shares as well. But he would have to report it if it was over 5%.

      So you make a good point. Assuming he purchased the 2010 exchangeable notes, I think they could be converted to around 200 million shares or about 25% of the minority vote. However, the wording in the 10-K is clear as mud so that is a very rough estimate on my part.