Clearwire, Sprint Expected to Reach Funding Deal: Reuters

Clearwire is expected to reach a funding deal with Sprint Nextel by the end of the year, and may even reach an agreement to prevent Clearwire from missing its $237 million debt payment due Thursday, sources close to the matter told Reuters.

The source said Clearwire was optimistic it could reach a funding deal with Sprint, but the details have not been hashed out yet.

Clearwire is looking to extend an agreement with Sprint, its largest client, to build its new wireless network. Sprint is also the majority owner of the company, which makes some analysts skeptical that Sprint would allow Clearwire to default on its debt.

Both Clearwire and Sprint declined to comment to IBTimes on the matter.

Clearwire has $698 million in cash and short-term investments as of Sept 30, enough to fund the company for a year. However, the company needs $900 million to upgrade its wireless network with high-speed wireless technology known as LTE and keep its operations running. The company would have a 30-day grace period if it failed to make its debt payment.

Shares of Clearwire tanked as much as 31 percent on Nov.18 after CEO Erik Prusch told the Wall Street Journal the company was looking to skip its debt payment.

It is a very expensive payment that we have, Prusch said to the Journal. It would be a significant drain on our cash, so we have to evaluate everything in terms of our decision of where we're going.

We have a number of advisers advising us on all of our strategic options, Prusch continued.

Shares of Clearwire rose 12.66 percent to $1.78 at market close. Shares of Sprint rose 8.00 percent to $2.70.

This story has been updated to provide share prices for both Clearwire and Sprint at Wednesday's market close.