Clearwire (Nasdaq: CLWR) managed to attract $715.5 million in new funding through a rights offering and deeper investments by parent company Sprint Nextel (NYSE: S) that will allow the company to begin rolling out TDD-LTE technology across its network.
The cash grab, which was announced this week, included $402.5 million in gross proceeds from the sale of 201.25 million Class A shares at $2 per share. Net proceeds came in at $384.1 million as 26.25 million of those shares were to underwriters that picked up their stock at a discount. The underwriters included J.P. Morgan, Bank of America Merrill Lynch and Jefferies.
Sprint Nextel kicked in the remaining $331.4 million from exercised pre-emptive rights on 173.6 million Class B common stock shares and a corresponding number of Class B units in Clearwire Communications.
Clearwire said it plans to use the net proceeds for “general corporate and working capital purposes, including the deployment of mobile 4G LTE technology alongside the mobile 4G WiMAX technology currently on its network, and for the operation and maintenance of its networks, and to pay fees and expenses associated with this offering.”
“This equity raise is a critical step for Clearwire to achieve its long-term business plan of creating the first wide-channel TDD-LTE 4G network in the U.S.,” said Erik Prusch, president and CEO of Clearwire. “The added resources will enable us to continue delivering 4G mobile broadband service to meet the rapidly growing demand in the industry. We remain ideally and uniquely positioned to serve both wholesale and retail customers well into the future.”
The funding is a significant turnaround for Clearwire, which only weeks ago was contemplating defaulting on a $237 million interest payment. Sprint Nextel has stated that Clearwire remains a significant partner in its next-generation network plans, perhaps even more so considering the ongoing regulatory issues impacting LightSquared. Sprint Nextel has said it expects to begin offering LTE services using Clearwire’s network in 2013.
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