Sprint - Nextel 2013 Annual Report Download - page 209

Table of Contents
Index to Consolidated Financial Statements
CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — ( CONTINUED)
Sprint. On July 9, 2013, Sprint completed the acquisition of Clearwire Corporation and its subsidiaries. See Note 1, Description of Business
See Note 16, Subsequent Events.
Note Purchase Agreement — In connection with the Merger Agreement, on December 17, 2012, we and certain of our subsidiaries also entered into the
Note Purchase Agreement, in which Sprint agreed to purchase from us at our election up to an aggregate principal amount of $800 million of 1.00% exchangeable
notes due 2018, in ten monthly installments of $80.0 million each. We elected to forego the first two draws (January 2013 and February 2013) under the Note
Purchase Agreement which reduced the aggregate principal amount available to $640 million. We elected to take the March, April and May draws and received
$240.0 million from Sprint. In addition, we elected to forego the June draw. See Note 9, Long
- term Debt, Net, for further information.
Rollover Notes —
In connection with the issuance of the 2015 Senior Secured Notes, on November 24, 2009, we issued notes to Sprint and Comcast with
identical terms as the 2015 Senior Secured Notes. From time to time, other related parties may hold portions of our long
- term debts, and as debtholders, would be
entitled to receive interest payments from us.
Relationships among Certain Stockholders, Directors, and Officers of Clearwire —
Prior to the completion of the Sprint Acquisition, Sprint, through
two wholly
- owned subsidiaries, Sprint HoldCo and SN UHC 1, Inc., owns the largest interest in Clearwire with an effective voting and economic interest of
approximately
50.1% . After the conversion of their Class B Common Interests and corresponding number of Class B Common Stock into Class A Common Stock,
Comcast, Intel and Bright House together own voting interest in Clearwire of approximately
13.0% at July 9, 2013, prior to consummation of the merger with
Sprint.
Clearwire, Sprint, Intel, Comcast and Bright House are party to the Equityholders
’ Agreement, which sets forth certain rights and obligations of the
equityholders with respect to governance of Clearwire, transfer restrictions on our common stock, rights of first refusal and pre
- emptive rights, among other
things.
4G MVNO Agreement — We have a non
- exclusive 4G MVNO agreement, which we refer to as the 4G MVNO Agreement, with Comcast MVNO II, LLC,
TWC Wireless, LLC, Bright House and Sprint Spectrum L.P.,which we refer to as Sprint Spectrum. We sell wireless broadband services to the other parties to
the 4G MVNO Agreement for the purposes of the purchasers' marketing and reselling our wireless broadband services to their respective end user subscribers.
The wireless broadband services to be provided under the 4G MVNO Agreement include standard network services, and, at the request of any of the parties,
certain non
- standard network services. We sell these services at prices defined in the 4G MVNO Agreement.
S print Wholesale Relationship
Under the November 2011 4G MVNO Amendment, Sprint is paying us a fixed amount for unlimited 4G mobile WiMAX services for resale to its retail
subscribers in 2013, a portion of which will be paid as an offset to principal and interest due under a $150.0 million promissory note issued by us to Sprint on
January 3, 2012, which we refer to as the Sprint Promissory Note. The Sprint Promissory Note has an aggregate principal amount of $150.0 million and bears
interest of 11.5% per annum. On January 2, 2013, we offset $83.6 million of principal and related accrued interest to reduce the principal amount we owe to Sprint
under the promissory note to $75.0 million maturing on January 2, 2014. If not previously paid, Sprint may offset the amounts payable by us under the Sprint
Promissory Note, including interest, against payments then due by Sprint to Clearwire Communications under the 4G MVNO Agreement, as amended. Because
the Sprint Promissory Note was entered into in conjunction with the November 2011 4G MVNO Amendment, and amounts due may be offset against payments
due under the November 2011 4G MVNO Amendment, it is treated as deferred revenue for accounting purposes, and associated interest costs are being
recorded as a reduction to the payable by Sprint for unlimited WiMAX service in calendar year 2013.
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