Clearwire Chair McCaw Resigns Amid Financial Woes
Clearwire Chairman Craig McCaw, offering two days' notice, has resigned, according to a Dec. 29 filing with the Securities and Exchange Commission. According to the filing, McCaw's decision to leave the company was "not due to any disagreements with [Clearwire] or any matters relating to [Clearwire's] operations, policies or practices."
McCaw's departure is nonetheless notable, as the company has been publicly struggling to maintain the financing it needs to continue building out its 4G network.
Clearwire was the first company to offer a 4G network ("CLEAR") to American consumers, in the form of WiMax technology. It was originally funded in 2008 by Sprint Nextel, Google, Time Warner Cable, Comcast, Intel and others, according to Bloomberg, and many of these investors again contributed to a $1.56 billion round of funding in 2009, when the company announced it was low on cash.
Sprint, which owns a 51 percent share of the company and offers its own branded 4G service via Clearwire, has worked hard over the last several quarters to rebuild its own struggling brand-a thing it has begun succeeding in, thanks in part to its 4G offering and complementary 4G smartphones-and so has distanced itself from Clearwire. While some have suggested it's a likely candidate to purchase Clearwire, Bloomberg reports that earlier in December the carrier said it "has no plans to take that step."
In November 2010, facing difficulties in the continued build-out of its 4G network and announcing it may only have enough cash to reach mid-2011, it sold more than $1.3 billion in debt, in a deal consisting of three parts-a first lien of $175 million and a second lien of $500 million, plus a $650 million sale of 8.25 percent exchangeable notes due in 2040.
During a talk at a JP Morgan conference on Dec. 3-the same day that Clearwire released a statement on the sale of the debt-Clearwire CFO Erik Prusch told attendees, according to Reuters, "We're comfortable about where we're going to be at the end of the year. Certainly this gives us plenty of new flexibility."
During a call with investors three days later, Prusch was again optimistic, saying, according to Bloomberg, "This really gives us the runway that we were looking to in terms of funding our operations."
McCaw, who served as Clearwire chairman for two years, was closely tied to the brand, and his departure leaves many wondering what the repercussions of his move, if any, will be.
According to the SEC filing, the 61-year-old McCaw was nominated to his position by Eagle River Holdings, an investment group, which has the right to nominate his replacement.
In McCaw's place, states the filing, "it intends to nominate Benjamin G. Wolff," a young 40-something who was formerly a co-chairman of Clearwire and is currently the CEO of ICO Global Communications. According to Forbes, Wolff has also served as the president of the Eagle River group.
On Dec. 28, Clearwire officially extended its service to San Francisco, Oakland and other parts of the Bay Area, bringing its number of available markets to 71.
"We're offering game-changing access to the Internet," Allan Lamb, regional manager for CLEAR, said in a statement. "For the first time, consumers are able to wirelessly access the Internet at superfast speeds, at affordable prices, and without limits on how much 4G data they use."