See my post in regards to the communication filed by Crest today. Their letter lays out a variety of scenarios where significant value will be achieved with a direct bidding war commencing for CLWR and Sprint approving a sale.
Available today under SEC filings on Clearwire's investor page
Some may argue that our possible scenarios will not play out for one simple fact: Sprint will not sell its shares in Clearwire. Indeed, we understand that Sprint cannot be forced to sell its stake in Clearwire. However, we can envision a scenario where Sprint could be a seller. This could occur if bids for Clearwire were high enough to convince the Sprint board of directors that, in exercising their fiduciary duties, a sale of Sprint’s Clearwire stock is in the best interests of Sprint and its stockholders. We could envision a scenario in which such a decision was a rational outcome. If this circumstance were to present itself to the Sprint board of directors, it could determine that Sprint could carry on its current business without controlling Clearwire. Such a determination could be based on the following: Sprint would have already received a significant influx of cash (over $3 billion) from SoftBank. In addition, Sprint would receive a significant amount of additional cash through the sale of its Clearwire shares, which would provide Sprint with an opportunity to reduce its debt and gain additional liquidity. And, finally, Sprint would still have access to Clearwire’s spectrum through its existing 4G MVNO Agreement with Clearwire.
On the other hand, if Sprint were to prevent a sale of the Company, we ask you: What does that say about Sprint’s assertions regarding the value of Clearwire? Sprint believes that its $2.97 per share price is fair to Clearwire’s minority stockholders. If the Clearwire Board were to conduct the sales process we describe here and obtain a better offer than the Sprint offer, how could Sprint say with a straight face that such an offer is not better for Clearwire’s minority stockholders? We would say: It can’t.
Not here, but Who? Where? When? How Much??? Those answers could be a valuable piece in this puzzle. Please share.
I'd think that patent was filed by Dish or DirecTV if it didn't say Verizon on it. Very interesting.
This is from the comments section of the Barrons article titled: DISH: Google, Apple Should Bankroll Ergen’s Vision, Says BTIG from a few weeks ago. JBM1 had well written comments including another about the history of spectrum and their valuations. This one lays out a bright future for Clearwire and 2.5Ghz.
Why Ergen is the future and Sprint is not: (and why Apple, Google should “step up”):
Where is the new world of Apple and Gen Y going: heavy tonnage wireless broadband data, particularly /video. Why is the old world of T, VZ & S not going to keep up: because they have to support a legacy market (voice and a wireline infrastructure), unions, and because they are as Steve Jobs said, scalers not developers.
So what? Think five years ahead. China/Huawei dominate the worldwide 2.5GHz network of data and video (ip voice only please). T/VZ/S are on (more) government support having lost that market due to the inability to keep up (read, compete) with the light-footed worldwide ip competition (think GM/Chrysler).
Who has the 2.5Ghz spectrum for small cell dense data efficiencies? Who has no legacy systems to support and can design their network for maximum data efficiency (presently TDD-LTE)
CLWR already has the spectrum licenses and agreements with China Mobile to jointly develop TDD-LTE at the worldwide clear channel 2.5Ghz band. US “national security” concerns will yield to commercial realities as Huawei covers the earth and the politics of “no nation is an island” tipping point is breached.
CLWR becomes the US “operating company” for China Tel, similar to Ma Bell and the operating companies of the ’50′s. Apple buys a network for its worldwide demand for products.
Brave new worlds, heavy truckin’ ahead… And thank you, Charlie!
SEC Filing from Sprint After Hours Today:
Communication to DISH employees from Joe Clayton, DISH President and Chief Executive Officer
May 13, 2013
Last week, you may have seen that we announced our first-quarter earnings. Though we had several headwinds, including our first customer price increase in two years, I would have preferred stronger fundamental performance from across the business. One bright spot worth noting: although our net activations were below last year’s, we did beat DirecTV.
We will cover our Q1 performance in more detail and expectations for the remainder of the year at our May 24 ATM, which will be broadcast from our El Paso, Texas facilities. Watch for more details.
No doubt, you have also been following the exciting news about our proposal to merge with Sprint…
As Charlie reported in the analyst call, we continue to work with the Sprint board’s ‘special committee’ and we are answering their questions. It is our hope that they will share our conclusion that our offer is superior to SoftBank’s. Stay tuned!
Remember, the reason we are positioned to pursue this deal is because of you. Our discipline, our focus on the customer, and our passion has given us options. After 40 years in business, I can say with authority that we are in a unique position.
Hard work, dedication, responsibility and accountably are key traits of our culture. They drive our success, our opportunities, and they make DISH the BEST company in America to work for. Period!
I hope you all share my enthusiasm. I look forward to speaking with you all on May 24 from El Paso.
Here’s to winning!
SoftBank Corp has asked investment banks not to finance a rival bid for Sprint Nextel Corp by Dish Network Corp, saying this could hurt the banks' chances of gaining a role in the highly anticipated public offering of Alibaba Group Holding Ltd, according to two people with knowledge of the matter.
Japanese telecom company SoftBank, which is a big shareholder in Chinese e-commerce company Alibaba with a 33 percent stake, is locked in an escalating bidding war with Dish, after the U.S. satellite TV provider made a $25.5 billion proposal for Sprint in April.
SoftBank, which has an existing agreement with Sprint to buy 70 percent of the U.S. wireless carrier for $20.1 billion, has heavily criticized Dish's offer, saying the rival bid does not have committed financing in place.
Dish, which has said it would need to raise $9 billion in debt to finance the offer, is in the process of lining up financing, but is encountering challenges partly because banks have come under pressure from SoftBank to avoid any financing of Dish, the people said on Friday.
At least one major Wall Street bank has withdrawn from financing the Dish bid because of the bank's relationship with SoftBank and its likely role in the Alibaba IPO, they added.
Will it cost more for Sprint to up their bid now, or payout the appraised value later?
HOUSTON, May 10, 2013 — Crest Financial Limited, the largest of the independent, minority stockholders of Clearwire Corporation (NASDAQ: CLWR), has told its brokerage firms to take all necessary steps to perfect Crest’s rights under Section 262 of the Delaware General Corporation Law to seek appraisal for the common stock of Clearwire Corporation that it beneficially owns.
The Delaware law permits Clearwire shareholders electing to exercise their appraisal rights to ask the Delaware Court of Chancery to determine the fair value of their Clearwire common stock if the Sprint-Clearwire merger is consummated and certain other conditions are satisfied. The law states that a Clearwire stockholder that votes FOR the Sprint-Clearwire merger cannot elect to exercise its appraisal rights.
David Schumacher, general counsel of Crest, said: “Crest will vote AGAINST the proposed Sprint-Clearwire merger. We are taking this action today to preserve our rights to an appraisal by the Delaware court. The law prevents Clearwire stockholders that vote FOR the merger from seeking fair value for their shares through an appraisal action. Therefore, those Clearwire shareholders that vote FOR the merger will not be able to participate in, or benefit from, a recovery in any appraisal action. We are optimistic that the court will decide that the fair value of Clearwire’s common stock is significantly higher than the $2.97-a-share that Sprint is offering for it.”
Crest has long argued that the price Sprint Nextel Corporation is offering to pay Clearwire stockholders for their shares is highly inadequate, that the merger was structured in a way that unfairly disadvantages minority stockholders and that Clearwire would be better off if it remained a stand-alone company.
Crest also commended Glass, Lewis & Co., a leading proxy advisory firm, for its recommendation urging that Clearwire stockholders vote against the proposed merger with Sprint.
This is page 19 of Crest's definitive proxy filed on 5/8 and found on the Clearwire SEC filings page. The number at the bottom seemed very familiar to me and I immediately thought of McCaw's A/B share prices. He received $13.98/share for his B shares. Coincidence?
Sprint's proxy statement highlights the value SoftBank placed on Sprint owning 100% of CLWR.
SoftBank requested that Sprint provide multiple pro forma scenarios, including Spring as a stand-alone entity (scenario #1 below - Sprint not owning 100% of CLWR) and also Sprint owning 100% of CLWR (Scenario #4).
Sprint NPV Scenarios NPV($/million)
Sprint "Stand-alone" Pro Forma
#1 Revised Baseline Scenario (9/5) $14,320
#2 Revised Baseline Model w/ Additional Network Build (9/28) $21,699
#3 Revised Baseline Model w/Additional Network Build (10/12) $19,020
Sprint Acquisition of CLWR Pro Forma
#4 Clearwire Acquisition Model (9/25) $28,271
Utilizing these NPV assumptions, Sprint could increase its offer for the remaining CLWR shares to approximately $13.97 per share and make SoftBank financially indifferent between owning Sprint as a a stand-alone company (i.e., not owning 100% of CLWR) or owning Sprint with the additional costs of purchasing remaining CLWR shares
Tweeted this evening from Robert Yu of the New York Times after his interview with Ergen. This sounds similar to the network Google has been testing.
I understand all that you've written has been discussed here. What I took as new information was in regards to the Sprint Superior Offer. If Sprint switches suitors, then Intel and others are no longer obligated to allow Sprint to count their shares in favor of the Sprint/Clear wire merger agreement. If they exercise that right, then they also do not have to honor the right of first offer. Also the merger agreement extends to 12/31/13. lastly neither Clear wire nor Sprint have the right to cancel the merger agreement if Sprint chooses a new suitor. New or not, I'm not sure, but it seems worth discussion.
Pursuant to the terms of the Voting and Support Agreement, each of the Voting Agreement Stockholders have the right to terminate the Voting and Support Agreement as to each of themselves by written notice to Clearwire and Sprint if Sprint has terminated the Sprint-SoftBank Merger Agreement in order to enter into an agreement with respect to a Sprint Superior Offer. In addition, if a party to the Voting and Support Agreement (other than Clearwire) terminates that agreement then the Agreement Regarding Right of First Offer will also terminate as to that party, and each party also has the right to terminate the Agreement Regarding Right of First Offer as to itself if Sprint has terminated the Sprint-Softbank Merger Agreement in order to enter into an agreement relating to a Sprint Superior Offer. As a result, if Sprint terminates the Sprint-SoftBank Merger Agreement in order to enter into the proposed transaction with DISH, then each of the Voting Agreement Stockholders may terminate their obligations to vote in favor of the Merger Agreement Proposal, the Charter Amendment Proposal, the NASDAQ Authorization Proposal and the Adjournment Proposal (and so such stockholders may vote their shares of Common Stock in their discretion), and the number of shares of Common Stock that Sprint may be obligated to acquire (and the relevant stockholders may be obligated to sell) pursuant to the Agreement Regarding Right of First Offer may decrease. The foregoing description of certain provisions of the Voting and Support Agreement and the Agreement Regarding Right of First Offer is qualified in its entirety by reference to such agreements. For more information, see “The Voting and Support Agreement” and “The Agreement Regarding Right of First Offer.”
This looks new:
On April 15, 2013, DISH publicly announced that it had submitted a non-binding proposal to the board of directors of Sprint to acquire all of the outstanding Sprint shares for total cash and stock consideration of $25.5 billion. The Special Committee, Company management and the Company’s board of directors continue to monitor developments relating to this proposal.
Pursuant to its terms, neither the Company nor Sprint has the right to terminate the Merger Agreement if Sprint terminates the Sprint-SoftBank Merger Agreement in order to enter into an agreement with respect to an unsolicited superior offer from a third party, which we refer to as a Sprint Superior Offer. Rather, in the event of such a termination of the Sprint-SoftBank Merger Agreement, the Merger Agreement would remain in effect and Sprint’s consummation of the Merger would be conditioned on the consummation of the transaction contemplated by the Sprint Superior Offer. If Sprint enters into an agreement with respect to a Sprint Superior Offer, the Outside Date under the Merger Agreement is automatically extended to the end date under the agreement relating to the Sprint Superior Offer but may not be extended beyond December 31, 2013 without the Company’s consent. The foregoing description of certain provisions of the Merger Agreement is qualified in is entirety by reference to the Merger Agreement. For more information, see “Merger Agreement.”
Oh, and in the short term, this was the WORST time to buy as it went down about 50% in a month or two from that point as I remember it. I'm sure a bunch of people threw in the towel on that drop. His predictions and posts are good to stay informed and grounded, but I think there are bigger things ahead for this stock. I dont't think he agrees.
I remember his phrase was "buy on the dips". Search that above and you get the post below. He kept posting around this time to buy, I believe as the stock declined from the $1.70's down to the $1.20's or so.
4/18/2012 - Buy on this dip imo. Caveat, earnings still not out and results and near term expectations might not be good.
Continued...He's lost confidence here and there but he keeps ending up with $4.50, and it goes on and on and on...like his posts (and this one).
1/21 - Ed's post to Teamrep: Analysts of the 1990's are dinosaurs, my friend. The game has changed immensely since you were one of the smartest guys in the room. Don't throw logic into the mix....its all about greed and control these days. CLWR will be well rewarded, beyond your $4.50 prediction.
1/15 - That common CW shareholders will get a sweetened deal north of $3? 80%
North of $4? 40%; North of $4.50? 5%
1/13 - Now it looks more like a potential downward move to 2.97 or an upward move to as high as 4.50 with around 3.30 being a near term betting level. Its not exciting as a stock... however, the stuff going on around outside of the scenes is very exciting as the side show.
1/8 - The fat lady may not have sung yet, but the prospects are narrowing, not expanding. My guess of $4.50 is looking more like wishful thinking ... $3.50 may be the new bar.
1/8 - If the offer had been for $4.50 per share, that would force Sprint to take a firmer counter. -
1/7 - Both sides, imo, have merits which is why my guess for value of CLWR stock is $4.50 and not a much higher number.
1/3 - The best hope for investors that is left is to hold out for $4.00-$4.50. That now looks like it would be negotiate with Crest & Kellett and then to common shareholders, that is if it happens.
12/28/12 - Hold out for a better offer... around $4.50 imo.
Well I wouldn't call it a heartwrenching defense, I was just answering the question that someone had asked in a balanced way. What I was really getting at there was that our energy would be better used trying to find answers and collaborating instead of bickering attacking a poster. As for $4.50 search 4.50 in the search box for this thread. Here's what you come up with from TeamRep:
4/11 - The likely result remains a settlement of from the current level to as high as $4.50.
4/5 - As a result, CLWR should have a higher value - the $4.50 range is not out of line of being reasonable.
4/3 - The $-4.50 range is an upper target possibility based on DISH and S-SB coming to some sort of arrangement to sell a portion of unused spectrum, probably sub-leased spectrum rights. Its merely a guess...
4/3 - I suggested the final offer would be $4-$4.50.
4/3 - Or could the price settle out closer to my original guess of last year of $4-4.50?
3/7 - There is still an outside chance for 4.00-4.50, although 4.50 now looks like crazy talk
2/22 - The only other purpose for this board is as a jot place for surrounding news and ideas. That value is dissipating and will end within six months at the outside as CLWR gets taken out for, at most $4.50.. probably around $3.50.
2/20 - However, they should be given a higher premium, say $4.50 worth of New Sprint imo... but then I don't get to vote.
2/1 - I've continued to keep the stock at a buy but have narrowed my estimate for the price target upon being taken out of its misery over the past several months as circumstances have changed, from as high as $7 of about a year ago to the $4-$.50 range over the past few months, starting since before the offers went on the table.
1/29 - Maybe $4.50 will again look like a reasonable target
1/22 - f I had thought otherwise, I would have not said months ago that a take out value for CLWR was $4.0-$4.50 and not $7 or more that might be justified by analysis that is within the bounds of reality.
Multiple bids for and financing offers are coming in for Clearwire. As for other players not yet in the fray, I could see DISH offering to divest some of their MSS spectrum to AT&T as part of a FCC requirement for approval of this deal, which would finance a good portion of the S/CLWR takeover. If people thought that Softbank/Sprint/Clearwire controlled too much spectrum, then it stands even more so for Dish since they already have holdings of their own. Also, how are T-Moblie/MPCS going to address their spectrum concerns? Dish as a wireless operator will have leverage against DirecTV. What is their plan? Clearwire's spectrum is attractive, works on a worldwide scale, and is unencumbered. I think there's more to unfold on the horizon.