KIRKLAND, Wash.-Nextel Partners Inc. delivered a Notice Invoking Alternate Dispute Resolution Process to Nextel Communications Inc. under its joint-venture agreement signed between the two companies in early 1999.
According to a Securities and Exchange Commission filing, Nextel Partners said the notice claims that certain elements of Nextel’s pending acquisition by Sprint Corp. will violate obligations under the joint-venture agreement. Those violations include Nextel Partners not being able to use the same brand identity as the combined Sprint/Nextel, which recently announced the Sprint name would be used to brand the combined Sprint/Nextel service.
Nextel Partners added that changes to marketing and national accounts, operational issues and excluding Nextel Partners from participating in discussions regarding branding and other operational matters has violated its joint-venture agreement.
Nextel Partners also said that it has taken action against Nextel in New York Supreme Court, asking the court to issue an injunction preventing Sprint from closing on its acquisition of Nextel or preventing Nextel from making any branding changes pending the outcome of Nextel Partners’ dispute with Nextel.
In an SEC filing last month, Nextel Partners’ management said it would encourage shareholders to vote in favor of a put option that would require Nextel to acquire its affiliate for “fair market value” plus a put premium following Sprint’s acquisition of Nextel, which is expected to close during the third quarter.
Sprint is facing similar challenges from its affiliates that claim their network agreements prevent Sprint from offering a competing wireless service in their markets.
Analysts have said they expect the combined Sprint/Nextel eventually to acquire their affiliate partners following the completion of Sprint’s acquisition of Nextel, though the timing of the roll-up could be impacted by the affiliate agreements.
