Mountt Kellett Capital Management, a hedge fund run by Goldman Sachs is turning up the pressure on Clearwire Corporation (NASDAQ:CLWR). Clearwire is one of Kellett’s top ten holdings. In a public letter addressed to Clearwire Corporation (NASDAQ:CLWR)’s board, the fund’s managers stress the need to improve valuation of CLWR’s stock especially in face of vocal plans of takeover from Clearwire’s largest shareholder Sprint Nextel Corporation (NYSE:S). Sprint will acquire control of Clearwire Corporation (NASDAQ:CLWR) by buying its shares from Eagle River and replace the majority BoD at Clearwire.
The letter urges the wireless network operator to sell excess spectrum that ranges between 60-80 megahertz. Kellett expects the sale to generate $6 – $9 billion which will significantly improve the value of its remaining spectrum. This will allow the company to spend in other avenues and close the funding gaps in its expenditures. The shareholders at Kellett firmly believe that the present stock value of Clearwire is undervalued and is incapable of generating a decent bid from Sprint. The content of the correspondence clearly conveys a dislike for the way Sprint is going about its ‘veiled’ plans to buy Clearwire, Jonathan Fiorello, Chief Operating Officer at Mount Kellett, writes,
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Sprint Nextel Corporation (NYSE:S) should declare its intentions publicly one way or the other – either commit to not continuing to amass more stock and relinquish its board seats, or make a tender offer to all stockholders to allow them to evaluate the offer and the future of the Company under Sprint’s control. If Clearwire’s board instead does nothing and Sprint ultimately acquires Clearwire at a bargain price, we intend to consider all available measures to hold both the Board and Sprint and its affiliates responsible for any losses inflicted upon the public stockholders as a result.
Sprint’s large position in Clearwire Corporation (NASDAQ:CLWR) allows it to make business deals, Kellett is also wary of the ways in which Sprint Nextel Corporation (NYSE:S) can exploit Clearwire’s technological capacities. The letter urges the board to put up any new business agreements between the two companies to vote for unaffiliated shareholders of Clearwire so that they can assess how beneficial the terms are for the company. The hedge fund believes that Clearwire Corporation (NASDAQ:CLWR) has unique technology that can generate large gains, provided the arrangements are favorable and of high standard.
Softbank Corp (TYO:9984) recently announced its intention to acquire 70% of Sprint. The status of Clearwire has remained a subject of speculation.