Clearwire May Miss Dec. 1 Debt Payment, Raising Fears of a Default

Clearwire (NAS: CLWR) is weighing whether to skip a $237 million debt payment due Dec. 1 as it tries to conserve its cash, according to Clearwire CEO Erik Prusch.

"It's a very expensive payment that we have," Prusch said in an interview with the Wall Street Journal. "It would be a significant drain of our cash, so we have to evaluate everything in terms of our decision of where we're going."

The mobile WiMAX operator had $698 million in cash and short-term investments on hand Sept. 30 and has enough money to make the debt payment. Skipping the payment could raise concerns about the company's liquidity and whether or not it can stay out of bankruptcy court. Clearwire does have a 30-day grace period after the Dec. 1 deadline to make the payment.

Nevertheless, the news sent Clearwire's shares plunging as much as 31 percent in trading Friday afternoon.

Prusch told the Journal the company is focused on inking more wholesale deals and getting more funding, but declined to comment on whether Clearwire would need to restructure its debts either in or out of bankruptcy court. "We have a number of advisers advising us on all of our strategic options," he said.

Clearwire has said it needs $600 million to deploy a TD-LTE network across its WiMAX footprint. The company's WiMAX netork covers more than 130 million POPs, but has stalled. The company also needs $150 million to $300 million to maintain its legacy WiMAX business. Sprint Nextel (NYS: S) , Clearwire majority owner and largest wholesale customer, raised $4 billion in a debt offering earlier this month and said it may use some of the proceeds to fund Clearwire.

An analyst suggested Prusch may be trying to get leverage over Sprint. "I think they're using the interest payment as a negotiating tactic with Sprint," Mizuho analyst Michael Nelson told Reuters. "Sprint has the most to lose if Clearwire defaults on its debt and files for bankruptcy."

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