|By PR Newswire||
|November 6, 2012 09:42 PM EST||
HOUSTON, Nov. 6, 2012 /PRNewswire-USNewswire/ -- Today, Crest Financial Limited, an investment firm based in Houston, sent a letter to Mount Kellett Capital Management LP regarding issues related to the rights and economic position of the minority shareholders of Clearwire Corporation (NASDAQ: CLWR) in light of Clearwire's relationship with Sprint Nextel Corporation (NYSE: S) and Clearwire's liquidity issues related to the Clearwire's build-out program.
The text of the letter is as follows:
November 6, 2012
VIA FACSIMILE AND COURIER
Mr. Jonathan Fiorello
Chief Operating Officer
Mount Kellett Capital Management LLP
623 Fifth Avenue
New York, New York 10022
Dear Mr. Fiorello:
Crest Financial Limited ("Crest"), a Houston-based investment company, is a long-term investor in Clearwire Corporation (the "Company"). Crest, with its affiliates, currently owns 45,756,898 Class A shares of the Company, or approximately 6.62 percent of the Company's outstanding Class A stock.
We have read the November 1, 2012 letter that you sent to the Company. Crest also has been monitoring the recent developments associated with the Plan of Merger and Agreement ("Merger Agreement") between Sprint Nextel Corporation ("Sprint"), the Company's dominant shareholder, and Softbank Corporation ("Softbank"). It appears that the Softbank-Sprint merger may not be in the Company's best interest and may threaten the interests of the Company's minority shareholders. Your letter expressed many of the concerns we have in this regard, and we commend you for sending it.
By way of background, Crest and its affiliates have a long history of investing in the spectrum that Clearwire currently holds. In 1996, the FCC awarded to Digital & Wireless, a Crest affiliate, licenses providing rights to frequencies in 19 markets in a BTA auction. In June of 2004, Clearwire Corporation, then still a privately-held corporation, acquired these licenses from Digital & Wireless. As part of the consideration for this sale, Crest received a significant number of Clearwire Corporation shares. Since that sale, Crest and its affiliates have continued to purchase shares in Clearwire, thus evidencing our belief in the value of Clearwire's assets and, just as important, Clearwire's business plan for monetizing these assets.
Unfortunately, the Company finds itself with insufficient capital to build out its facilities to realize the full value of the spectrum capacity that it holds. Like you, Crest would expect that, if the members of the Company's Board were intent on discharging their fiduciary duties, they would take immediate action to bolster the Company's liquidity.
In addition to the sale of excess spectrum that you proposed in your letter, Crest believes that immediate steps to raise capital through the offering and sale of additional common shares would be among the steps a board of directors, acting in the best interests of all shareholders, would pursue. Proceeds from such an offering, together with proceeds from the sale of a portion of the Company's excess spectrum to a third party or parties, would ensure a successful build-out of the Company's network and bolster the Company's position as it renegotiates the lease of its spectrum to Sprint. And the additional and immediate network investment facilitated by a successful share offering would likely increase the value of Clearwire's assets and thus the sale price for any excess spectrum.
It is Crest's view that this sale of additional shares can be done quickly and successfully for the good of the Company, its shareholders and the public at large. Indeed, Crest would consider participating in such an offering.
There are a number of reasons why a public offering and sale of shares, in addition to the sale of its excess spectrum, should be pursued. First, the value of the Company's assets, which the Softbank-Sprint proposal and the Company's own disclosures confirm, would easily support such an offering. Second, the proceeds from the sale of shares would provide the Company with the capital necessary to push ahead with its build-out strategy during the period it is working to complete its sale of excess spectrum. Third, raising capital from investors other than the dominant shareholder, or at least pro rata with it, would prevent what has amounted to a creeping tender offer that Sprint has said is its intention with regard to the Company – to wit, the buying of shares of strategic investors whenever it gets a chance. Finally, the Company has recently experienced success in raising capital, specifically through sales of its common shares to the public utilizing its Sales Agreement with Cantor Fitzgerald & Company. There is no reason why these efforts should not continue. Indeed, it is unclear why the Company abruptly ended that arrangement near the end of July notwithstanding the success CF&Co. experienced in selling the Company's common shares under that arrangement.
Crest also is concerned that recent actions (or inactions) of the Company's Board may not be in the best interests of either the Company or its minority shareholders. Like you, we also expect that the members of the Company's Board will continue to perform the fiduciary duties that each owes to the Company and its shareholders. Crest is concerned that Softbank and Sprint are positioning themselves to obtain the exclusive benefit from the Company's valuable spectrum and assets through the Merger Agreement at the expense and to the detriment of the Company and its minority shareholders. While Sprint acquired enough shares to further cement its control of the Company (50.8%) just days after the Merger Agreement was announced, Sprint and Softbank have stated publicly that their transaction "does not require Sprint to take any actions involving Clearwire other than those set forth in agreements Sprint has previously entered into with Clearwire and certain of its shareholders." Odder still is the value placed on the shares purchased by Sprint in that transaction: $2.00 per share of Class A stock and $13.98 per share of Class B stock. The Class A shares were valued at their original price. But the Class B shares received a significant premium; Class B shares were issued at $7.33 per share. We think this higher valuation for the Class B shares is intended to unfairly benefit Class B shareholders and at the expense of Class A shareholders, including Crest and you.
In light of this, Crest believes that compliance with its fiduciary duties under these circumstances would require a properly functioning Board to take a variety of actions to mitigate the danger of Sprint improperly using its status as the controlling shareholder to oppress the rights and economic position of minority shareholders. For example, it could assess the impact on the Company and its public shareholders of the Softbank-Sprint merger as well as subsequent events and public statements, review all other dealings with Sprint, and establish defensive measures to enhance the ability of independent directors to ensure full value for minority shareholders. One area of inquiry could be the Equity holders Agreement of 2008 and, specifically, the standstill agreement that prohibits Sprint from "any direct or indirect acquisition of any Common Stock." The standstill agreement contains an exception to protect minority shareholders—namely, that Sprint can only make an offer for 100 percent of the Company's shares, and only if the offer is approved by independent, unaffiliated members of the Company's Board and by a majority of minority voting shares.
Any or all of these steps would strengthen the Board's ability to prevent any future offer by Sprint to purchase the Company or its assets at a distressed or undervalued price.
From day one, Crest has seen its investment in the Company as a way to facilitate the completion of a world-class network that could challenge the extant duopoly in the wireless communications industry, bring real competition and innovation to the marketplace, and benefit consumers of mobile telecommunications. These goals, which we are sure will be the focus of the Federal Communications Commission's approval process, can be achieved only if the Company's spectrum and assets are managed for the benefit of all stakeholders and not just for shareholders with temporary or untoward advantage and dominance.
We believe that, properly managed, the Softbank-Sprint merger proposal presents an opportunity to benefit not only the interests of all shareholders, but also the public interest. Improperly managed, the merger could harm minority shareholders and the public at large. Crest will continue to monitor the Company's progress and is eager to engage the Company on any relevant matters.
/s/ David K. Schumacher
David K. Schumacher
Crest Financial Limited
SOURCE Crest Financial Limited
DevOps at Cloud Expo, taking place Nov 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with 19th Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. The widespread success of cloud computing is driving the DevOps revolution in enterprise IT. Now as never before, development teams must communicate and collaborate in a dynamic, 24/7/365 environment. There is no time to wait for long dev...
Aug. 27, 2016 11:00 AM EDT Reads: 2,341
The 19th International Cloud Expo has announced that its Call for Papers is open. Cloud Expo, to be held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, brings together Cloud Computing, Big Data, Internet of Things, DevOps, Digital Transformation, Microservices and WebRTC to one location. With cloud computing driving a higher percentage of enterprise IT budgets every year, it becomes increasingly important to plant your flag in this fast-expanding business opportuni...
Aug. 27, 2016 11:00 AM EDT Reads: 3,957
Aspose.Total for .NET is the most complete package of all file format APIs for .NET as offered by Aspose. It empowers developers to create, edit, render, print and convert between a wide range of popular document formats within any .NET, C#, ASP.NET and VB.NET applications. Aspose compiles all .NET APIs on a daily basis to ensure that it contains the most up to date versions of each of Aspose .NET APIs. If a new .NET API or a new version of existing APIs is released during the subscription peri...
Aug. 27, 2016 10:30 AM EDT Reads: 1,951
Data is the fuel that drives the machine learning algorithmic engines and ultimately provides the business value. In his session at Cloud Expo, Ed Featherston, a director and senior enterprise architect at Collaborative Consulting, will discuss the key considerations around quality, volume, timeliness, and pedigree that must be dealt with in order to properly fuel that engine.
Aug. 27, 2016 10:15 AM EDT Reads: 1,881
SYS-CON Events announced today that StarNet Communications will exhibit at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. StarNet Communications’ FastX is the industry first cloud-based remote X Windows emulator. Using standard Web browsers (FireFox, Chrome, Safari, etc.) users from around the world gain highly secure access to applications and data hosted on Linux-based servers in a central data center. ...
Aug. 27, 2016 08:45 AM EDT Reads: 748
SYS-CON Events announced today that Hitrons Solutions will exhibit at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Hitrons Solutions Inc. is distributor in the North American market for unique products and services of small and medium-size businesses, including cloud services and solutions, SEO marketing platforms, and mobile applications.
Aug. 27, 2016 08:00 AM EDT Reads: 602
Pulzze Systems was happy to participate in such a premier event and thankful to be receiving the winning investment and global network support from G-Startup Worldwide. It is an exciting time for Pulzze to showcase the effectiveness of innovative technologies and enable them to make the world smarter and better. The reputable contest is held to identify promising startups around the globe that are assured to change the world through their innovative products and disruptive technologies. There w...
Aug. 27, 2016 07:45 AM EDT Reads: 655
As the world moves toward more DevOps and Microservices, application deployment to the cloud ought to become a lot simpler. The Microservices architecture, which is the basis of many new age distributed systems such as OpenStack, NetFlix and so on, is at the heart of Cloud Foundry - a complete developer-oriented Platform as a Service (PaaS) that is IaaS agnostic and supports vCloud, OpenStack and AWS. Serverless computing is revolutionizing computing. In his session at 19th Cloud Expo, Raghav...
Aug. 27, 2016 07:45 AM EDT Reads: 782
Today we can collect lots and lots of performance data. We build beautiful dashboards and even have fancy query languages to access and transform the data. Still performance data is a secret language only a couple of people understand. The more business becomes digital the more stakeholders are interested in this data including how it relates to business. Some of these people have never used a monitoring tool before. They have a question on their mind like “How is my application doing” but no id...
Aug. 27, 2016 03:15 AM EDT Reads: 1,772
Personalization has long been the holy grail of marketing. Simply stated, communicate the most relevant offer to the right person and you will increase sales. To achieve this, you must understand the individual. Consequently, digital marketers developed many ways to gather and leverage customer information to deliver targeted experiences. In his session at @ThingsExpo, Lou Casal, Founder and Principal Consultant at Practicala, discussed how the Internet of Things (IoT) has accelerated our abil...
Aug. 27, 2016 02:30 AM EDT Reads: 2,004
With so much going on in this space you could be forgiven for thinking you were always working with yesterday’s technologies. So much change, so quickly. What do you do if you have to build a solution from the ground up that is expected to live in the field for at least 5-10 years? This is the challenge we faced when we looked to refresh our existing 10-year-old custom hardware stack to measure the fullness of trash cans and compactors.
Aug. 27, 2016 01:45 AM EDT Reads: 1,734
Extreme Computing is the ability to leverage highly performant infrastructure and software to accelerate Big Data, machine learning, HPC, and Enterprise applications. High IOPS Storage, low-latency networks, in-memory databases, GPUs and other parallel accelerators are being used to achieve faster results and help businesses make better decisions. In his session at 18th Cloud Expo, Michael O'Neill, Strategic Business Development at NVIDIA, focused on some of the unique ways extreme computing is...
Aug. 27, 2016 01:30 AM EDT Reads: 2,098
The emerging Internet of Everything creates tremendous new opportunities for customer engagement and business model innovation. However, enterprises must overcome a number of critical challenges to bring these new solutions to market. In his session at @ThingsExpo, Michael Martin, CTO/CIO at nfrastructure, outlined these key challenges and recommended approaches for overcoming them to achieve speed and agility in the design, development and implementation of Internet of Everything solutions wi...
Aug. 27, 2016 01:15 AM EDT Reads: 2,016
Cloud computing is being adopted in one form or another by 94% of enterprises today. Tens of billions of new devices are being connected to The Internet of Things. And Big Data is driving this bus. An exponential increase is expected in the amount of information being processed, managed, analyzed, and acted upon by enterprise IT. This amazing is not part of some distant future - it is happening today. One report shows a 650% increase in enterprise data by 2020. Other estimates are even higher....
Aug. 27, 2016 12:45 AM EDT Reads: 2,938
With over 720 million Internet users and 40–50% CAGR, the Chinese Cloud Computing market has been booming. When talking about cloud computing, what are the Chinese users of cloud thinking about? What is the most powerful force that can push them to make the buying decision? How to tap into them? In his session at 18th Cloud Expo, Yu Hao, CEO and co-founder of SpeedyCloud, answered these questions and discussed the results of SpeedyCloud’s survey.
Aug. 27, 2016 12:45 AM EDT Reads: 2,155