Clearwire to sell $1.1B of debt to stay afloat
updated 12:40 pm EST, Thu December 2, 2010
Clearwire plans on selling secured debt notes
Following last month's announcement that it will lay off workers in order to save money, Clearwire is now planning to sell at least $1.1 billion of debt. Wells Fargo & Co. analyst Jennifer Fritzsche believes this is the best resolution for Sprint, which owns 54 percent of Clearwire, as it does not have to put up capital to help out the struggling Clearwire.
The funds raised from the sale may also allow Clearwire to expand its customer base from 25 million to 30 million customers next year, Fritzsche added. In a statement, Clearwire said it is considering offering $175 million of first-priority senior secured notes due in 2015, $500 million of second-priority secured notes due 2017 and $500 million of exchangeable notes due 2040.
At the start of November, Clearwire said in an SEC filing that it was facing losses and didn't know where its future funding will come from, which may lead to its inability to continue operating a viable business. As a result, it began cutting 15 percent of its workforce, reducing sales and marketing expenses and delaying its own-brand smartphone service in order to save between $100 and $200 million in 2010. [via BusinessWeek]
