Seeking the financial firepower to keep its buildout rolling, clwr announced today that it intends to raise more than $1.1B in cash through the sale of debt securities. That they are raising cash will surprise absolutely no one, as they still need lots of it to continue their buildout and stand a chance many years down the line of achieving the scale necessary to fund themselves. Is $1.1B enough? Probably not in and of itself, but it would get the train back on the tracks for another year - assuming they are able to find enough buyers for all this paper.
There are three notes being offered: $175M of senior secured notes due 2015, $500M of second priority secured notes due 2017, and another $500M of exchangeable notes due 2040 which Clearwire can pay back in stock or cash. Purchasers of that last one also get options on another $100M of exchangeable notes. However, there is an additional complication in that the big holders of Clearwire stock (85% of the voting power) have pre-emptive rights on that exchangeable stock. Holders of 31% of voting power have already said they won't, leaving 54%. That sounds suspiciously close to Sprint's holdings, and I suspect they may use it to ensure they maintain a majority stake - depending on how things go.
As we close out 2010, Clearwire has now brought online some of the largest markets nationwide. Further buildouts will be to smaller cities. Each will be less complex but there will be more of them. Meanwhile, the great subscriber hunt is sure to dominate the company's fortunes in 2011. They need to ramp high, hard, fast, and long even as Verizon's LTE network comes online.
Meanwhile, Sprint Nextel (NYSE:S, news, filings) moved to fill those three Clearwire board positions that it had left open earlier this month, nominating William R. Blessing, Mufit Cinali and Hossein Eslambolchi.
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