Sprint Nextel Corporation (S): How The Clearwire Corporation (CLWR) Offer Could Fall Short

SPRINT NEXTEL CORP (NYSE:S)It was only a couple of weeks ago that shareholder discontent forced T-Mobile’s parent company to sweeten its MetroPCS Communications Inc (NYSE:PCS) buyout offer. Two hedge funds, Paulson & Co. and P. Schoenfeld Asset Management, so badgered MetroPC with SEC filings opposing the merger that Deutsche Telekom finally came up with terms that quelled the misgivings of those influential investors.

Now, Sprint Nextel Corporation (NYSE:S)‘s proposed buyout of its networking partner Clearwire Corporation (NASDAQ:CLWR) is also facing serious shareholder opposition.

Clearwire investor Mount Kellett Capital Management, which owns 7.7% of Clearwire shares, sent a letter to Clearwire’s board soon after the Sprint deal was proposed in October, saying it believed “Clearwire’s stock to be substantially undervalued.”

Last December, another Clearwire Corporation (NASDAQ:CLWR) shareholder, Crest Financial, holder of 5.2% of Clearwire shares, went further than just sending a letter. It sued the board, the company, and Sprint Nextel Corporation (NYSE:S) to stop the buyout. Crest alleged (link opens PDF) “breaches of fiduciary duty by Clearwire’s controlling stockholders and its officers and directors.”

Just this past week, an additional lawsuit landed on Clearwire’s doorstep, this one from another shareholder, hedge fund Aurelius Capital Management. In its court filing, Aurelius said that Sprint Nextel Corporation (NYSE:S), as Clearwire’s majority stockholder, had forced “manifestly unfair” conditions upon the company’s minority shareholders.

On April 9, Aurelius chairman Mark Brodsky wrote to the Clearwire Corporation (NASDAQ:CLWR) board offering the company some financing to make it less dependent on Sprint. Brodsky wrote that though the $80 million it was willing to lend Clearwire wasn’t even close to the $480 million available from Sprint Nextel Corporation (NYSE:S), “We believe the $400 million differential could readily be obtained through a combination of the $240 million of financing proposed by Crest Financial Limited … [and there would be] an additional $160 million … we trust others would welcome providing.”

Why the rush forward to provide Clearwire Corporation (NASDAQ:CLWR) with funding? You can bet it’s for the large cache of spectrum licenses Clearwire controls. DISH Network Corp. (NASDAQ:DISH) has already made a $2.2 billion offer to buy 24% of Clearwire’s spectrum, and Verizon Communications Inc. (NYSE:VZ) has offered to buy between $1 billion and $1.5 billion for a portion of spectrum.

The $2.1 billion that Sprint has offered for total ownership of Clearwire Corporation (NASDAQ:CLWR) — and all its spectrum — just isn’t cutting it now for those investors with a lot of shares at stake.