May 16, 2013
/PRNewswire/ -- Crest Financial Limited, the largest of the independent minority stockholders of Clearwire Corporation (NASDAQ: CLWR), yesterday sent a letter to Clearwire stockholders detailing why it is asking Clearwire stockholders to reject the proposed merger with Sprint Nextel Corporation.
The letter reiterates Crest's belief that Clearwire and its trove of spectrum is "the ultimate prize in the intensifying battle for Sprint." The Sprint effort to merge with Clearwire is really "an attempt to take value from the Clearwire stockholders without offering them fair value," the letter states.
The letter also states:
"We believe allowing Sprint to consummate the Sprint-Clearwire Merger will leave enormous value on the table for Clearwire stockholders—value that will assuredly be captured by Sprint and its ultimate acquirer. We believe that one way in which Sprint and its ultimate acquirer could capture this value is by using its controlling position in Clearwire to cause it to sell its excess spectrum and, instead of using these proceeds to build-out Clearwire's network, Sprint could use these proceeds to pay down some portion of the debt that was incurred to purchase Sprint in the first place. It is no secret that both SoftBank and DISH intend to incur a significant amount of debt to purchase Sprint. Each of SoftBank and DISH also claim that it will be able to reduce this debt burden over a relatively short period of time. We believe that a sale of excess Clearwire spectrum is one way in which this de-leveraging could occur. However, we believe that Sprint and its ultimate acquirer would be able to use the excess Clearwire spectrum for this purpose ONLY IF Sprint controls 100% of Clearwire. Our view is based on the following: First, unless Sprint owns 100% of Clearwire's stock, Clearwire could not distribute the proceeds from such a sale of spectrum to just Sprint. Second, we believe that if Sprint, through its controlling position in Clearwire, were to cause Clearwire to sell excess spectrum while litigation is pending over the conduct of Sprint, Clearwire, and the Clearwire Board, such a sale could adversely affect the position of these parties in such a proceeding if such a sale were made at the values we believe should be attributed to Clearwire's spectrum. Thus, a successful vote "AGAINST" the Sprint-Clearwire Merger would prevent Sprint from benefiting from the Clearwire spectrum assets in this way at the expense of the Clearwire stockholders.