It’s official: Clearwire investors have agreed to pump an additional $1.564 billion into the mobile WiMAX provider. Conspicuously absent from the funding contributors is Google, which invested $500 million in the company last December only to have to write down that investment by $355 million.
“[Google is] the least desperate of the financing group,” says analyst Chris King with Stifel Nicolaus. “It’s nice for Google if Clearwire works, but not hugely necessary to its business model. For everyone else it’s hugely important. My sense is that Google has been as exposed [to risk] as they feel they need to get.”
Google landed several business deals with their investment in Clearwire, including agreements for mobile advertising and search. In addition, Clearwire will carry devices based on Google’s Android operating system.
Clearwire’s stock fell more than 40 percent over the course of last spring, forcing Google to write down the value of its investment triggering a contractual clause that granted some investors more shares. Google alone received an extra 4.4 million shares.
Just under a year ago, Comcast, Intel, Time Warner Cable, Google and Bright House Networks invested $3.2 billion into Clearwire. Sprint gave Clearwire its WiMAX assets and became the company’s majority shareholder.
King said the need for additional financing was not unexpected and estimates the carrier will need to raise another $3 billion to complete its nationwide mobile WiMAX network.
The round of funding is comprised of Sprint Nextel, Comcast, Time Warner Cable, Intel, Bright House Networks and Clearwire founder Eagle River Holdings. The bulk of the money comes from Sprint, which is kicking in $1.176 billion. Comcast is giving $196 million; Time Warner Cable is up for $103 million; Intel is providing $50 million; Bright House Networks is offering $19 million; and Eagle River is ponying up $20 million.
Clearwire will receive about $1.057 billion in cash from the equity financing within five business days, and $440 million in cash will be provided at a closing slated for the end of the year. The remaining $66 million should come in during the first quarter 2010.
The company also plans to launch a common stock rights offering, with each right being exercisable for approximately 0.4336 shares of Class A Common Stock at a per share price of $7.33. The investors in today’s deal have agreed not to exercise any rights received by them in the offering. Clearwire plans to file a registration statement with the SEC for the rights offering within the next 30 days.
Clearwire reports earnings after market close today. Analysts polled by Yahoo! Finance expect the company’s losses to narrow to 43 cents per share on sales of $66.62 million.