(Reuters) - Clearwire Corp CLWR.O shareholder Mount Kellett complained that Sprint Nextel Corp's (S.N) offer to buy out the company was "grossly inadequate" and said Clearwire's special committee had breached its fiduciary duties in accepting the offer.
Mount Kellett, a holder of roughly 7.3 percent of Clearwire's public shares, also said in an open letter to Clearwire on Wednesday that Sprint's December 17 bid for $2.2 billion, or $2.97 per share, would likely be voted down.
Sprint, which already owns just over 50 percent of Clearwire shares, needs approval from a majority of Clearwire's minority shareholders for the proposed buy-out to succeed.
The deal has also been publicly rejected by another shareholder Crest Financial, which holds roughly 8.34 percent of Clearwire's public shares.
Mount Kellett, an investment firm with about $7 billion under management, urged Clearwire's special committee to negotiate for improvements in an offer Dish Network Corp (DISH.O) announced on January 8 to buy Clearwire for $2.3 billion, or $3.30 per share, and said the Dish offer provided "further evidence" the committee had failed in its duty to shareholders.
Both Sprint and Clearwire declined to comment on the letter.
As part of their deal, Sprint plans to provide Clearwire with up to $800 million of financing, which would be exchangeable for Clearwire common stock at $1.50 per share, with the purchase of $80 million of exchangeable notes per month for up to 10 months beginning in January.
Clearwire did not draw on the initial $80 million financing because it said its special committee was reviewing the Dish offer, which precluded it from drawing on the financing.
But the investor criticized Clearwire's special committee for agreeing to the Sprint financing in the first place and accused it of failing to "adequately explore other financing alternatives" to the Sprint offer, which it described as "highly coercive and highly dilutive."
Sprint last week responded to the Dish offer by saying that it was not viable because of certain conditions required by the satellite television.
Mount Kellett urged the Clearwire committee to thoroughly evaluate the Dish proposal "including how to address certain obstacles to consummating the proposal asserted by Sprint."
Clearwire shares closed down 4 cents, or more than 1 percent, at $3.14 on Nasdaq and Sprint shares finished off 9 cents, or 1.6 percent, at $5.53 on the New York Stock Exchange after the shareholder letter was made public.
Reporting By Sinead Carew; Editing by Gerald E. McCormick, Gunna Dickson and M.D. Golan