Clearwire Makes New Funding Official

Clearwire made it official Nov. 10, confirming partner Sprint Nextel has invested another $1 billion in the WiMax provider. In addition, fellow partners Comcast, Time Warner Cable, Intel, Eagle River Holdings and Bright House Networks are making additional investments totaling $500 million.

In exchange for newly issued shares priced at $7.33 per share, the new round of equity financing includes $1.176 billion from Sprint Nextel; Comcast, $196 million; Time Warner, $103 million; Intel, $50 million; Eagle River, $20 million; and Bright House, $19 million.

Clearwire will receive approximately $1.057 billion in cash from the equity financing within five business days, $440 million in cash will be funded at a closing which is targeted to be completed by the end of the year and the remaining $66 million will be funded at a closing which is targeted to be completed during first quarter 2010.
“This additional level of strategic funding marks another important milestone in the progress of Clearwire, and will enable us to maintain our leadership and aggressive 4G WiMax network build plans,” Clearwire CEO Bill Morrow said in a statment. “Today’s news is also further validation of the importance of our 4G network to our strategic investors. We all benefit from this robust, all-IP, high-bandwidth network that delivers an unmatched combination of Internet speed and mobility.”
Clearwire also announced plans to launch an offering for a minimum of $1.45 billion in new senior secured notes with net proceeds to be used to pay off the company’s existing $1.40 billion credit facility. Sprint Nextel and Comcast, which are debt investors under Clearwire’s existing facility, have agreed to receive replacement debt on the same terms as the new offering, effectively allowing Clearwire to raise an additional $240 million in capital assuming the new notes offering is fully subscribed.
Clearwire and Sprint Nextel are the only two U.S. carriers betting on WiMax to deliver 4G wireless broadband. Verizon Wireless and AT&T, the nation’s two largest carriers, are betting on a rival technology called LTE for their 4G networks. Both WiMax and LTE allow for the delivery of last-mile wireless broadband access, promising faster download speeds than current cellular networks.
Sprint Nextel opened the original U.S. WiMax market in Baltimore last year. Following a merger that saw Sprint turn over its entire 2.5GHz spectrum holdings and its WiMax-related assets, including its Xohm division, to Clearwire, the new newly branded Clear Jan. 6 rolled out a WiMax network in Portland, Ore.