Weinberger releases final Schurz Communications LOI to buy Burlington Telecom

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Weinberger releases final Schurz Communications LOI to buy Burlington Telecom

Wed, 12/06/2017 - 4:01pm -- tim

by Timothy McQuiston Vermont Business Magazine The City of Burlington today released the final Schurz Communications Letter of Intent (LOI), following the City Council’s approval of the conceptual LOI at its last meeting on November 27, 2017. The non-binding LOI will be discussed at the City Council’s next meeting on December 11, 2017, and Council’s vote on the definitive documents that memorialize the commitments in the LOI is expected on December 18, 2017.

With the completion of the LOI, the City has begun working with Schurz Communications on the definitive asset purchase agreement, the legal agreement which will detail and ultimately supersede the LOI. The asset purchase agreement is expected to come before City Council for approval in substance on December 18 and to be signed no later than December 31, 2017. A petition for approval of the transaction by the Public Utilities Commission (PUC) is expected to be filed within 30 days of signing. The PUC approval timeframe is less predictable, but is anticipated to occur in mid-2018. During that time, the City of Burlington will continue to operate BT, and business will continue as usual without interruption. The sale of BT to Schurz is expected to close within 30 days following the PUC’s regulatory approval.

“Over the last week, we have worked hard on behalf of Burlingtonians and Burlington Telecom employees to finalize the conceptual agreement approved at the November 27 City Council meeting,” said Mayor Miro Weinberger. “I appreciate Todd Schurz’s collaboration over the last week to not only formalize what was committed to the City Council, but also to strengthen even further the proposal’s emphasis on the issues of affordability, net neutrality, and community re-investment. We will move from the LOI to the final legal documents as quickly as possible and bring them to the Council for formal adoption as early as December 18, 2017. After an important and substantive community debate for many months, I hope that the City Council and the public will now come together to support this direction and help us successfully put Burlington Telecom on a stable, long-term footing, and resolve once and for all one of the largest financial challenges in the City’s history.”

Details of the proposal include:

  • A purchase price of $30.8 million

  • Agreement not to increase prices on broadband for 60 months

  • Agreement to an anti-monopoly future sales restriction

  • Granting the City of Burlington the right to roll over cash proceeds from the sale into a minority ownership interest in the new BT, and to add a local Board representative

  • A commitment to net neutrality and a maintaining BT’s historic privacy policy

  • Commitment to the full, rapid build-out of Burlington and likely neighboring communities

  • $300,000 a year of annual contributions for at least ten years to growing the local tech economy, digital divide initiatives, and other community investments

Click here to download Schurz Communications Final Letter of Intent.

In the early morning hours of November 28, 2017, the Burlington City Council voted to permit the mayor to sign a letter of intent approving the sale of Burlington Telecom to Schurz Communications and their partner, ZRF Partners. The contentious Council meeting lasted just over eight hours and followed a reversal of the Schurz/ZRF partnership in which Schurz became the lead bidder.

Until the very end, Weinberger had pushed for Ting, a bidder from Toronto, to take over the fiber-optic based system. Two councilors held out for Keep Burlington Telecom Local group. In the end, the final vote was in favor of the remodeled Schurz deal 8-2 with two councilors for KBTL and two who supported Ting simply voting no.

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The acquisition is consistent with Schurz's desire to expand its broadband operations in communities where they can carry forward the mission and integrity of an existing company. The Indiana company will continue to be managed locally in Burlington and be operated under the name of Burlington Telecom. Pending regulatory approvals, the purchase is expected to close next year.

“Burlington Telecom has been an integral part of the City of Burlington for years and that’s not going to change.  We plan to continue investing in the business, the community, and the employees because we know that our success is at the local level where the day to day business will be run. On behalf of our company and ZRF Partners, we are deeply honored to be selected by the City of Burlington and will do all that we can to ensure the future success of BT and to foster the growth of Burlington's entrepreneurial and technology ecosystem,” said Todd Schurz President and CEO Schurz Communications.  

“Our view all along has been that Burlington Telecom is a great company, poised for continued growth”, said Faisal Nisar, Founder and Managing Director, ZRF Partners.  “In partnership with Schurz we believe the future for Burlington Telecom is bright and it will be a technology leader for residents and businesses for years to come”.

The Schurz/ZRF winning bid covers a wide range of benefits for the citizens of Burlington, including:

  • Keep BT’s local management and staffing levels, increasing over time as needed as the business grows.

  • Continue to operate as Burlington Telecom.

  • No broadband rate increases for five years.  On video only content cost increases will be passed on to the consumer at cost.

  • Commit to the completion of the BT Burlington buildout by 2019, with the exception of the 120 homes that present affordable build challenges.  We make a further commitment to work toward a solution to cost effectively connect those 120 homes.

  • Over time, expand the offerings of both residential and commercial services.

  • Work closely with BT's management to introduce new initiatives, including off hours evening and weekend customer service, customer appointments, early evenings and extended install windows.

  • Continue to support Net Neutrality.

    • No paid prioritization

    • No slow or fast lanes

    • Will not throttle or block access to legal content

  • Support local public access and other issues of importance to the community.

  • Maintain and expand Edu-Net for low income students, Lifeline for qualified residents and other initiatives aimed at bridging the digital divide gap. BT will contribute $350,000 over 7 years to establish local partnership programs to teach basic technical skills/competencies to work force/high school students to help them remain relevant and improve employment prospects.

  • BT will work with other stakeholders and invest $1.75M over 7 years to establish a BTV Ignite Technology Innovation Fund that provides mentorship and seed capital to local startups.

  • Allow the City of Burlington the opportunity to retain a meaningful carried equity interest in Burlington Telecom.

Burlington Telecom has been a locally owned and operated advanced fiber optic network serving the city of Burlington, VT since 2003.   BT offers feature-rich voice, video and data services, along with extensive local programming, to residents and businesses.  Burlington Telecom has a strong history of community involvement which will continue under the new ownership.

About Schurz Communications www.schurz.com Schurz Communications, Inc., is a Mishawaka, IN-based news and information company that consists of cable, newspaper publishing and digital media.  The company publishes daily and weekly newspapers in medium and small markets. It also owns cable companies and phone directories. Geographically, Schurz Communications has a presence in Arizona, Indiana, Iowa, Maryland, Michigan, Nebraska, Pennsylvania and South Dakota.

The company began in 1872 when Alfred B. Miller and Elmer Crockett founded the South Bend Tribune. The South Bend Tribune is still the flagship property, and family members have held editor and publisher positions at the newspaper for five generations. Schurz newspapers have a long tradition of editorial excellence, technical innovation and a commitment to the highest standards for quality and excellence in journalism. Schurz puts great emphasis on seeking the truth and sharing it with others. Our purpose is to provide a better understanding of the world, so that our readers, viewers and users are more informed and can positively impact our communities and society.

The company emerged as a broadcast pioneer in 1922 with the launching of WGAZ radio (now WSBT) in South Bend, and WSBT television began broadcasting in 1952. The first print acquisition was the Herald-Mail in Hagerstown, MD in 1960, the first cable acquisition was Antietam Cable TV in Hagerstown in 1968, and the first television acquisition was WDBJ-TV in Roanoke, Va. in 1969.

The company currently publishes ten daily newspapers in medium to small markets, operates three broadband systems, and has numerous digital sites and various other investments.

About ZRF: www.zrfpartners.com ZRF Partners is a private investment firm focused on building value through operational and strategic improvements.  Working side-by-side with management to drive growth through relentless operational execution and deploying transformative initiatives, ZRF’s approach ensures the Company’s full potential is realized. 

Source: Mayor 12.6.2017. Schurz. Schurz Communications Final Letter of Intent.