Clearwire Gets $1.6 Billion In Financing From Sprint Over Next 4 Years

Sprint Nextel Corp (NYSE:S) plans to pay up to $1.6 billion over the next four years to Clearwire Corp. (NASDAQ:CLWR). This will help ease concerns of a liquidity crisis at Clearwire. Clearwire said today they will pay $237 million in debt interest payment on December 1. Sprint owns the majority of Clearwire and last month Clearwire said it may skip the debt interest payment in order to conserve cash as it needs nearly $1 billion in financing to keep operating and fund a network upgrade.

These financing payments from Sprint include the expansion of their current network agreement and the potential for an equity investment.

Sprint has said it is committed to providing Clearwire with more funding “in the event of an equity offering.” If Clearwire raises between $400 and $700 million, Sprint offer on a pro rata basis up to $347 million, in line with its current voting interest.

Clearwire shares have taken a beating in recent months following Sprint’s comments on October 7 saying a Clearwire bankruptcy could be “constructive.” This in turn caused a massive sell off in the stock.

The two companies are also in talks to extend their network agreement beyond 2012 when their current contract expires.

Sprint stock is trading down 1.15% today at $2.669, while Clearwire shares rose on the news 26.97% at $2.26.

written by

Kyle Pinder has has over five years trading and research experience in the large cap space. While still in grad school, Kyle trades daily and keep Active Investor up to date with the latest breaking news coming out of Wall Street and Washington.
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