Lawsuits From Hedge Funds Against T-Mobile’s Bid For MetroPCS Are Dropped

Posted Apr 14, 2013

There were a couple of hedge funds that opposed T-Mobile USA’s bid for MetroPCS.  The hedge funds have now backed off from the lawsuits after an improvement has been added to the offer’s terms.  Earlier this week, Paulson & Company and P. Schoenfeld Asset Management indicated that they would support the revised proposal by T-Mobile’s parent company Deutsche Telekom.  In the new offer, the combined company would cut the amount of debt that would be assumed by around $3.8 billion.  The interest rate of the borrowings will drop around half a percentage point.

Deutsche Telekom will remain as an investor in the combined company for about 18 months instead of 6 months.  Deutsche Telekom will hold a 74% stake in the combined companies and MetroPCS shareholders will get a 26% stake.  Paulson & Co. still needs to review MetroPCS’s proxy statement in order to make a final decision, but they intended on voting for the new proposal.  P. Schoenfeld is dropping the proxy solicitation campaign and is supporting the new deal.  The hedge funds were seeking a debt cut and a lower interest rate along with a bigger equity stake in the combined company.


?While the revised transaction terms do not reflect all the improvements we were seeking, we feel our central goal of making the combined PCS/T-Mobile company more competitive and valuable for all shareholders, including Deutsche Telekom, resulted in obtaining superior value for PCS shareholders and believe that these revised terms are the best available alternative for PCS shareholders at this time,? said P. Schoenfeld in a statement.

The two hedge funds own around 12% of MetroPCS’s stock combined according to the New York Times.