Sprint ahead

21 October 2005 By Alex Fak

Sprint and Nextel Partners should move fast to settle the put option the latter has on the former. It is in both sides’ interests to avoid a prolonged and expensive valuations fight.

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On Monday, shareholders of Nextel Partners, a Kirkland, Washingtonbased mobile communications provider, are likely to vote to exercise a put option which would force Sprint Nextel to buy the 68% of Nextel Partners it does not already own. Sprint is likely to pay in cash, says a source familiar with the issue.

Nextel Partners is an affiliate of Nextel Communications, which Sprint acquired in August 2005. Nextel Partners has exclusive rights to offer licensed Nextel services in midsized and rural markets in 31 states with 54m residents.

Nextel Communications had agreements with affiliates, including Nextel Partners, which gave them an option to sell themselves to a bidder who buys Nextel.

Since Sprint's acquisition of Nextel became imminent, several hedge funds have announced stakes in Nextel Partners.

According to Nextel Partners' company charter, each side hires its own appraiser. If the appraisers' valuations for the company differ by more than 10%, a third appraiser will give an estimate on the fair market value. If the third value is within onethird of either of the first two in the range between them, the fair market value would be settled as the average between the third appraiser's value and whichever it is the closest to.

The process could take up to 110 days.

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