Sprint Nextel passes on Clearwire debt

Sprint Nextel Corp.’s (S) stake in Clearwire Corp. (CLWR) looks set to decline slightly after the nation’s third-largest operator declined to pick up its option to purchase up to $200 million worth of Clearwire’s debt tied to a recent debt offering.
Sprint Nextel noted in mid-December that it had until Jan. 2 to exercise its right to “to acquire up to its pro-rata share of exchangeable notes, if it chooses to do so.” That deadline has come and gone without a word from Sprint Nextel as to whether it picked up that option.
Sprint Nextel, which still owns more than 50% of Clearwire and relies on Clearwire’s WiMAX network for its “4G” service, said at the time that while it has not decided on its course of action, it was continuing to hold talks with Clearwire regarding “further investment in the company,” but added that it “has no plans at present to acquire Clearwire.”
Clearwire closed on the $1.1 billion debt offering in early December, which the carrier plans to use to help fund network expansion beyond the approximately 110 million potential customers covered at the end of 2010.
In late 2009, Sprint Nextel coughed up nearly $1.2 billion to Clearwire to help fund the carrier’s 2010 buildout plans. That investment increased its stake in Clearwire from its original 51% to around 55%.
As for its future ownership stake, Sprint Nextel said that through an agreement with Clearwire investors the carrier can “unilaterally surrender voting securities to reduce its voting security percentage below 50%.” Sprint Nextel said the move will provide it with “additional flexibility to avoid any risk that Sprint incurs a default under its debt agreements because of its voting interest in Clearwire.”