Pardus Capital Management today released a letter it sent on May 20 to the Chairman of the Board and Interim CEO of Clearwire, John Stanton, calling for the company to re-examine the sale of spectrum holdings to help boost the company’s value to a possible suitor.
Pardus Capital has a large investment in Clearwire but has been disappointed in the company’s stock performance as of late.
“The stock’s performance has not borne out our initial optimism, trading down from $5.91 on the day you became chairman to $4.49 on May 18, a drop of nearly 25%. During the same period, Sprint shares have traded up from $4.36 to $5.33, an increase of more than 22%,” wrote Karim Samii, president and CIO of Pardus Capital.
Samii wrote that he was troubled by Sprint and Clearwire’s inability to come to strategic agreements important to Clearwire’s future. Specifically, Pardus Capital is concerned about “a network sharing deal with Sprint that does not reflect the best economics for Clearwire.”
“Further, the structure of the network sharing deal could all but foreclose other strategic options for Clearwire, effectively giving Sprint an exclusive on an eventual take-under of the company, to the public shareholders’ disadvantage,” Samii wrote.
Pardus wants a board of non-Sprint designated directors to form a negotiating committee that would consult closely on Clearwire’s negotiations with Sprint, stressing that the sale of excess spectrum should be considered.
Clearwire raised $1.3 billion in funding in December, but Samii writes that should not hold Clearwire back from holding a spectrum sale. Samii decried that in the company’s Q1 earnings call, it said that a spectrum sale is “something that we certainly don’t have to consider in 2011.”
Clearwire has been telegraphing a possible spectrum sale to the public for some time now.
In closing, Samii petitioned Clearwire to meet with Pardus Capital to discuss future options and asked that the company continue to “explore strategic alternatives to a Sprint deal, including selling excess spectrum at a premium to the value implied by Clearwire’s enterprise value.”