Nextel Communications Inc. said it has sent a letter to affiliate Nextel Partners Inc. asking for revisions to a Securities and Exchange Commission filing by Nextel Partners in late June detailing the terms of a control premium in the affiliate’s put option. That option, if exercised, would require Nextel to acquire the 68 percent of Nextel Partners it does not currently own for fair market value plus a control premium following Nextel’s pending acquisition by Sprint Corp.
“The preliminary proxy statement included a variety of other information, particularly sections essentially paraphrasing the unusual and complex language in the company’s certificate of incorporation governing the put rights, ‘risk factor’ boilerplate and various other data, including a stock trading price historical table,” Nextel wrote in the letter that was part of an SEC filing. “It did not include financial data that we believe would be necessary to assess the intrinsic value of Nextel Partners.”
Nextel also reiterated claims in a previous SEC filing that a recent run-up in Nextel Partners’ stock price following the announcement of Sprint’s planned acquisition of Nextel last December should be discounted in determining a “fair market value” for Nextel Partners.
“In our opinion, additional discussions of the ‘unaffected’ market price is required,” Nextel said. “In our opinion, the ‘unaffected’ market price to which the charter refers are those that prevailed before the possibility of the put exercise became manifest.”
In a previous SEC filing, Nextel described Nextel Partners’ current trading value metrics as being “the highest in the industry by a significant margin” and added the appraisal value “could be lower, and we think should be lower” than its current trading price of $24.50 per share. Nextel noted that its affiliate’s current enterprise value as a multiple of Wall Street 2005 estimates and enterprise value per subscriber is more than twice Nextel’s value despite Nextel generating more operating income before depreciation and amortization per subscriber than Nextel Partners.
Nextel Partners’ stock has jumped more than 40 percent since Sprint announced plans to acquire Nextel last December and was trading at $24.38 per share early Tuesday.
