Clearwire (Nasdaq:CLWR) in $1.1 Billion Private Placement

Clearwire (Nasdaq:CLWR) said they've raising capital via a $1.1 billion debt private placement.

Commenting on it, Canaccord said, "Clearwire announced the private placement of a $1.1-billion debt raise consisting of: 1) $175 million in 2015 first- priority senior notes; 2) $500 million in 2017 second priority senior notes; and 3) $500-million 2040 Exchange Notes, plus an additional $100-million overallotment. The offering includes the right for existing shareholders to purchase up to an additional $585 million in exchange notes on a pro-rata basis. Separately, Sprint (NYSE: S) also announced three appointees to the Clearwire board. Credit Suisse believes that this is positive for Sprint for several reasons: 1) it reduces the risk that Sprint will have to bid for Clearwire; 2) it also appears that Sprint will buy $585 million of exchange notes, with capital going in as debt rather than equity; 3) demonstrates that Clearwire has access to capital other than from Sprint; and 5) total amount of the debt coming in is more than expected by Credit Suisse, which means that Sprint is on the hook for less than expected. There is one negative, though, Clearwire would have received much better terms on debt if it came with equity. As such, Credit Suisse believe that this suggests Sprint and Clearwire are not as close to an agreement as had been hoped. The analyst had hoped for a final resolution of their issues before year end, but perhaps this will drag into Q1/11. Credit Suisse expects the debt to be successfully placed, allowing the company to raise at least $1.1 billion for its capital roll out, but potentially this financing could raise as much as $1.9 billion, which should Clearwire’s funding needs for 3-4 quarters.

Clearwire Corporation closed Friday at $6.03, up by $0.13, or 2.20 percent. Volume was over 4 times the usual 3-month daily average.