Vermont Business Magazine Mayor Miro Weinberger on Tuesday urged the City Council to advance to the final round the Schurz Communications and Ting/Tucows bids to purchase Burlington Telecom (BT). This was expected. The third bidder, Keep Burlington Telecom Local (KBTL), presented a bid that would provide less than half the cash and a very high debt load. The chairman of the BT advisory council already had advised against the KBTL bid because of that.
The mayor said that after careful consideration of the three proposals before Council (SEE BELOW), as well as the opinions of the Burlington Telecom Advisory Board (BTAB) and the multiple professionals advising the City on this transaction, that only the Ting/Tucows and Schurz proposals met all of the sales criteria developed by the public and approved by the City Council. He added that the two proposals offer significant benefits to taxpayers, BT customers, and the City.
“I appreciate the hard work of the KBTL Board and other volunteer supporters to present the City with an option for local ownership,” said Mayor Miro Weinberger. “KBTL’s focus on local issues throughout this process has helped shape the City’s goals and will positively impact BT’s future no matter which bid the City selects. Regrettably, however, the KBTL offer is simply not a viable option for the City to pursue. Selecting it would result in legal action and substantial taxpayer financial exposure, threaten to undo years of BT progress and put Burlington Telecom’s future on very uncertain footing. The KBTL focus on securing local benefits has improved the two very strong proposals from Ting and Schurz. These proposals would secure a bright future for BT, put the days of broadband monopoly behind us for good, lead to substantial reinvestment in our community, return millions of taxpayer dollars, and create the possibility of meaningful City ownership in the future company.”
The bid from the Canadian company Ting was $27.5 million; Schurz from Indiana was $30.8 million; and KBTL was $12 million, with $10.5 million in cash, including $10 million financed at 14 percent interest. All the bidders offered a way for the city to retain a minority stake in the "new" BT. KBTL would run the fiber-based telecom as a for-profit co-op, which would include current subscribers. BT provides Internet, phone and television service.
The mayor could veto the Council's decision, but would have no authority in the decision other than that.
A fourth bid from Faisal Nisar was withdrawn just prior to the opening of bids in September. He owns a private equity firm called ZRF Partners and had plans to expand tech opportunities in the city. But after much heat directed toward the mayor over the withdrawal, Nisar himself diffused the situation to general satisfaction and said he would not re-submit his bid. SEE STORY
However, the discussion about whether Nisar would jump back into the bidding process ultimately delayed the paring of bids down to two, which the City Council will now do on October 16. Because of the bridge financing with Blue Water Holdings LLC and completing payments to CitBank, the City would only net a few million dollars even if BT is sold in the $30 million range. In addition, those financial obligations have to be met by January 2018 (the deal does not have to close by then, but must be in place).
The City had lent BT $16.9 million, which it was not suppoed to do under the previous administration, most of which the City will have to absorb.
Source: City of Burlington