Dish Network reacted quickly to claims by Sprint Nextel that its pending offer to acquire a stake in Clearwire violates certain laws and shareholder rights.
In a letter to Clearwire Chairman John Stanton, Dish Chairman Charlie Ergen lays out counter-claims to a letter sent by Sprint Nextel to Stanton earlier this week, in essence refuting claims that Dish Network’s offer to acquire all or some of Clearwire for $4.40 per share is indeed legal and in the best interest of Clearwire shareholders.
“In light of recent public statements made by Sprint about the Dish proposal that we believe are incorrect and misleading to Clearwire stockholders in several material respects, it is important that we correct the record regarding the Dish proposal,” Ergen stated. “We remain confident that the Dish proposal is both actionable and clearly superior to the proposed Sprint merger. More importantly, it also provides a meaningful alternative to the significant group of your minority stockholders that remain opposed to the Sprint merger while providing a clear path for Clearwire to become a self-sustaining company.”
On Monday, Sprint Nextel sent a letter to Clearwire’s board of directors noting that Dish Network’s recent bid to acquire Clearwire was “not actionable,” citing “certain provisions violate Delaware law, Clearwire’s certificate of incorporation or the rights of the parties to the existing Clearwire Equityholders’ Agreement, including Sprint.”
In the letter, Sprint Nextel cited a handful of reasons as to why the Dish offer is not a “viable alternative,” including:
–Dish Network’s proposed board nomination process violates the Delaware law and the EHA.
–Dish Network’s proposed rights to veto certain actions violate Delaware law.
–Sprint Nextel does not plan on giving up governance rights.
–Dish Network’s proposed preemptive rights violate Delaware law and the Clearwire charter.
–Dish Network’s financing proposal requires Sprint Nextel and other EHA parties’ consent.
–The Dish Network proposal is a change in control that requires approval of 75% of Clearwire shareholders and the consent from Comcast, which has aligned itself with the Sprint Nextel proposal.
That last point was highlighted by analysts that doubted Comcast would allow a pay-TV rival to garner a controlling stake in Clearwire. The EHA terms were part of the original formation of the current Clearwire, which was announced in early 2008.
Dish countered that claim by arguing that a company with a 6% stake in Clearwire should have more protection than a company that could own more than 25% of a stake in the company.
The Sprint Nextel letter came just days after Dish Network’s latest bid for a stake in Clearwire, which was an increase over the pending $3.40 per share offer on the table from Sprint Nextel. That Dish proposal forced the delay of a Clearwire shareholder vote on the Sprint Nextel that was originally scheduled for May 31 to June 13. Sprint Nextel currently holds a controlling stake in Clearwire.
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