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December 12, 2011

Clearwire Underwriters Buy Another $52.5 Million Class A Shares

By Ashok Bindra
TMCnet Contributor

Last week, cellular network operator Clearwire (News - Alert) Corp. announced plans to offer $350 million of its Class A common stock in a registered public offering. The company plans to use the net proceeds from this offering to expand mobile 4G LTE (News - Alert) network alongside the mobile 4G WiMAX technology for the operation and maintenance of its networks.

At that time, Clearwire granted the underwriters a 30-day option to purchase up to an additional $45.0 million of its Class A Common Stock. On Monday, Clearwire said that the underwriters of the recent stock offering have exercised their option to buy another $52.5 million (or 26,250,000 shares) worth of Class A shares.

As a result, the total number of shares Clearwire is selling in the $350 million offering is 201.25 million. Analysts and market watchers believe that this is Clearwire’s latest step to save the struggling company.

Meanwhile, Sprint (News - Alert) Nextel, Clearwire’s largest investor, has agreed to buy a matching amount of Class B shares in connection with the offering.  Sprint said that it has the right to match any new investment to maintain its 49.6 percent voting stake in the company.

Early this month, Sprint and Clearwire inked new agreements with respect to WiMAX (News - Alert) and LTE services, worth about $1.6 billion over the next four years. Consequently, Sprint will support Clearwire’s WiMAX and LTE services. Sprint said that the agreements further align Clearwire’s LTE network build as a complement to Sprint’s network vision strategy.

In a company statement, Dan Hesse (News - Alert), Sprint CEO, said, "These agreements are a result of the technical MOU we outlined during our third quarter results call and extend our relationship with Clearwire… It provides Sprint improved pricing, allows us to continue to provide WiMAX 4G services to our customers today and to new customers in the future and provides additional LTE capacity to help complement our Network Vision strategy and meet our customers' growing data demands.”

In the premarket trading on Monday, shares of Clearwire fell five cents, or 2.6 percent, to $2.09.

Ashok Bindra is a veteran writer and editor with more than 25 years of editorial experience covering RF/wireless technologies, semiconductors and power electronics. To read more of his articles, please visit his columnist page.

Edited by Rich Steeves

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