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Clearwire Mails Letter Urging Stockholders To Vote 'For' Proposed Transaction With Sprint

Stocks in this article: CLWR

Reality: The Note Purchase Agreement with Sprint provides liquidity to Clearwire to continue operations and build out its network during the pendency of the merger.

  • Multiple components contribute to the value of the exchangeable note, including the coupon, the exchange price, and when the notes may be exchanged, which must all be considered together; and
  • The $1.50 exchange rate represents a premium to the unaffected share price prior to the Sprint-SoftBank rumors when Clearwire was speculated to be part of that transaction – Clearwire shares closed at $1.30 on October 10, 2012.

Misperception #4: Financial Restructuring/Bankruptcy Would Result in Higher Value for Stockholders

Reality: There is significant uncertainty for stockholders in a financial restructuring filing.

  • The value stockholders could receive in a financial restructuring is subject to many uncertainties, including:

- The existence of buyers in an auction for the entire Company;

- The ability to sell the entire spectrum portfolio without flooding the market at non-distressed prices;

- Potential taxes on spectrum sales which could materially reduce value to stockholders; and

- Potential damages claims by Sprint which could be substantial and could reduce value to stockholders, among others.

  • The outcome is unlikely to yield value to stockholders exceeding Sprint's $2.97 per share offer.

Misperception #5: Clearwire Should Pursue Path to Independence Offered by Recent Proposals

Reality: Clearwire is evaluating these opportunities, however, there are significant risks and the outcome to shareholders would be highly uncertain.

  • There are significant risks and challenges to the proposed alternatives, which are preliminary and non-binding, and if they cannot be mitigated, it is unlikely they will provide greater stockholder value than the Sprint offer;
  • A spectrum sale does not solve the fundamental need for significant additional revenues, and would not provide sufficient liquidity for operations;
  • Additional financing may be challenging, expensive and dilutive to stockholders, if available at all; and
  • Clearwire's difficult liquidity situation will put it in a worse position to negotiate any other strategic transaction, and financial restructuring may be the only available alternative.

Misperception #6: A Sale of Spectrum Would Provide Sufficient and Immediate Liquidity to Maintain Our Independence

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