Dish raises bid for Clearwire, threatening Sprint deal

Rick Wilking/Reuters - A sign hangs in the Dish booth on the first day of the Consumer Electronics Show (CES) in Las Vegas, in this January 8, 2013 file photo.

NEW YORK — One of the biggest minority shareholders in Clearwire on Thursday urged the wireless company to recommend against Sprint Nextel’s buyout offer after Dish Network made a counter bid.

Crest Financial, which holds about 8 percent of Clearwire shares, said that Clearwire should open itself to competitive bidding and that even though Dish’s bid late Wednesday appeared superior, it may still prove inadequate to shareholders.

In a statement late Thursday, Clearwire said it would adjourn its Friday meeting, at which shareholders were expected to vote on Sprint’s $3.40-per-share offer. Dish’s new bid is worth $4.40 per share. Clearwire said the meeting will reconvene June 13, giving the special committee nearly two weeks to decide on Dish’s latest proposal.

Clearwire also said its special committee found Dish’s newest proposal to be more “actionable” than its previous one.

The offer complicates a consolidation scenario in which Dish Chairman Charlie Ergen is also competing against Japan’s SoftBank to buy Sprint, the No. 3 U.S. mobile service provider. Sprint is the majority owner of Clearwire.

Some analysts speculated that the Clearwire bid indicates Dish would be happy with an investment in the smaller company or a spectrum purchase from Clearwire.

But Dish said it was not backing down from its bid for Sprint. “Our Clearwire offer in no way diminishes our interest or vision for a combined Dish/Sprint,” a Dish spokesman said.

Clearwire, which in April warned that it could default on interest payments due June 1 if the Sprint deal did not go through, said Thursday that it plans to make those payments, totaling about $255 million, on its first-priority, second-priority and exchangeable notes.

Under Sprint’s December proposal to buy out Clearwire, the smaller company had the option to draw on $800 million in convertible debt in 10 monthly installments. But Clearwire said that, upon the recommendation of its special committee, it has decided to forego the June $80 million draw under that arrangement.

On the same day that Dish made the bid for Clearwire, Ergen and other Dish executives involved in the Sprint bid were holding meetings at Sprint’s Overland Park, Kan., campus as part of the due diligence process for that offer, according to a source familiar with the matter.

Whatever Dish’s motivation for the Clearwire bid, analysts said it spells trouble for SoftBank founder Masayoshi Son and his efforts to gain approval for Softbank’s $20.1 billion bid for Sprint at a shareholder vote June 12.

Softbank had approved Sprint’s bid to buy Clearwire.

SoftBank gained clearance to go ahead with its Sprint offer earlier this week from a key U.S. government committee but needs more regulatory approvals.

Dish, which had tried to buy Clearwire in January, appeared to strengthen its case by excluding conditions from the new bid that had made it difficult for Clearwire to accept the previous offer.

Clearwire had said it could not act on the January offer from Dish for $3.30 per share because some of the bid conditions went against previous agreements that Clearwire had with Sprint.

Since Dish removed some of the conditions in its new bid, another source said that Ergen appeared to have “made a serious offer that is actionable” and that the board and its special committee will have to review the proposal carefully.

“This is a much improved offer from Dish, not just the dollar amount,” said the source who asked not to be named. “He’s got himself in the game now.”

— Reuters

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