Clearwire Corp. is weighing whether to make a big debt payment that comes due in two weeks, a decision that could prove a turning point for a company that had hoped to cover the country with wireless broadband service.
The $237-million payment is due Dec. 1. And Clearwire, with $698 million in cash and short-term investments on Sept. 30, can afford to make it. But the company needs to raise lots of money if it is to stay in business after the next 12 months, so it's debating the unusual step of failing to make a payment.
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"It's a very expensive payment that we have," CEO Erik Prusch said in an interview. "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."
Failure to make the payment could raise concerns about whether the money-losing and indebted company can stay out of bankruptcy court. Clearwire's dilemma underscores the difficulty of mounting a challenge to the country's leading wireless carriers -- Verizon Wireless and AT&T Inc. -- as devices like the iPhone push up the cost of building out networks.
Clearwire has a 30-day grace period after Dec. 1 to make the payment. Prusch said he's focused on cutting new deals to sell service on Clearwire's network and securing more funding. He wouldn't comment on whether the company would need to restructure its debts either in or out of bankruptcy court, but said Clearwire was seeking advice on its options.
"We have a number of advisers advising us on all of our strategic options," Prusch said.