Clearwire Corp., the unprofitable wholesale wireless carrier, soared as much as 29 percent after partner and main owner Sprint Nextel Corp. said it may use proceeds from a note offering to help finance the company.
Clearwire gained 21 percent to $2.11 at 10:23 a.m. New York time, after rising as high as $2.25. Before today, the shares had lost 66 percent this year on concern that the company will run out of money.
Money from Sprint would allow Kirkland, Washington-based Clearwire to fund its operations and help pay for a planned network upgrade. Clearwire said this week that it has capital for 12 months and that its future may depend on Sprint, with which it is in talks for a new wholesale agreement. Sprint had previously signaled that it wouldn’t provide Clearwire with financial backing.
Sprint said today proceeds from the sale of the seven- and 10-year notes will be used “for general corporate purposes, which may include, among other things, redemptions or service requirements of outstanding debt, network expansion and modernization and potential funding of Clearwire,” according to a company statement.
Leigh Horner, a Sprint spokeswoman, declined to comment beyond the statement. Mike DiGioia, a Clearwire spokesman, wanted to review the offering before commenting.
Clearwire said this week that its priority is to reach a new network-sharing agreement with Sprint, adding that a failure to do so could jeopardize operations. Clearwire has also said it needs about $1 billion for its operations and to upgrade its network from the WiMax technology to long-term evolution, or LTE.
“We really have one overarching goal which is to get the company to profitability,” Clearwire Chief Executive Officer Erik Prusch said this week in an interview. “We want to have a long-term WiMax commitment, a long-term LTE commitment, and funding. We’ve got to get these things done as soon as we can.”
Sprint, which accounts for most of Clearwire’s revenue and customers, said last month it will stop selling WiMax devices after 2012. The carrier also said it may use Clearwire’s network to handle traffic from customers using LTE beginning in 2013, though the talks haven’t yet concluded. Their existing network- sharing agreement expires at the end of next year.
Clearwire said this week access to funding has been hampered by the “perceived impact of Sprint’s new 4G strategy on our business,” according to a company filing. “If these events continue to adversely affect us, additional capital may not be available on acceptable terms, or at all.”
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