Sprint Nextel Corporation(NYSE:S) plans to raise $1.5
billion via its public debt offering that could help fund its subsidiary Clearwire
Corporation(NASDAQ:CLWR), the company said late on Thursday.
The offer for the notes, carrying a coupon of 7
percent and maturing in 2020, would close on Tuesday.
According to the details provided by the company the
funds raised would be used in paying down debt, financing its wireless network
expansion and also for its two units Clearwire and Clearwire Communications
LLC.
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Clearwire, owned nearly 50 percent by Sprint, is
facing cash-flow problems and is carrying a sizeable debt of $4.24 billion in
long-term papers, according to a filing made with the Securities and Exchange
Commission.
There have been rumours swirling around that Dish
Network Corp has bought a large portion of Clearwire's debt. Financial aid from
its majority shareholder could be coming at the right moment for the company.
Clearwire which lets wholesale customers resell its 4G
services under their brands has become increasingly dependent on its partner
Sprint for its business, which is its biggest customer. This was revealed by
Clearwire at its second quarter earnings release last month.
However Clearwire uses WiMax technology for its 4G
services compared to Sprint which uses LTE technology. Clearwire will soon be
adding LTE to its network.
Sprint “may have, or may develop in the future,
interests that may diverge from other stockholders,” Clearwire said in the
earnings release.
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Analysis on CLWR
Shares of Sprint were up 2.5 percent at $4.92 after
hitting a new 52-week high of $4.96 earlier in the week. The stock soared over
15% last week.
Sprint has increased very well in the past few months. Does anyone have an idea as to where the stock should go in the coming weeks?
ReplyDeleteJohn Mayo