Fourth bidder for Burlington Telecom will not return

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Fourth bidder for Burlington Telecom will not return

Thu, 09/28/2017 - 4:38pm -- tim

Vermont Business Magazine Mayor Miro Weinberger and City Council President Knodell released the following update on the Burlington Telecom process: "Since Tuesday we have spent hours together and with other parties exploring whether there is a way in which the fourth bidder could re-enter the BT sales process. The bidder has chosen to remain withdrawn from the process. The City greatly appreciates the interest the bidder had in Burlington and the ideas and energy they brought to the process.

“Resolving this matter has delayed focus on the bids that are before the City Council for consideration. Instead of voting to narrow the field to two bids on October 2, as planned, the Council will hear a public summary by Terry Dorman of each of the three proposals and have the opportunity to ask Dorman & Fawcett and the City’s attorneys questions about the bids. The Council will then vote to select two final bidders to conduct legal due diligence with on October 16.”

Seven Days first reported in its story that the fourth bidder is Faisal Nisar, who lives in New Jersey and not a "local bidder" as the news media had believed. He said he's been reluctant to speak out because of the non-disclosure agreements and because he doesn't want to get in the way of the process. He owns a private equity firm called ZRF Partners. 

In contrast to the consernation his initial withdrawal had caused among councilors and others, Nisar said to the Burlington Free Press Thursday night: "They're going through an important process," he said. "I wish them well." 

The harsh criticism against the mayor mostly quieted following the meetings with Nisar and Council members. SEE STORY

After Weinberger announced on September 20 the three finalists to buy BT, much of the City Council reaction was to a fourth, local bidder who dropped out right before the final list was presented. At least two councilors were holding out hope that the fourth bidder would jump back in.

One councilor called the withdrawal of the fourth bidder a "breach of trust" with the mayor. The mayor had expressed concerns with a possible and undisclosed conflict of interest to the bidder and the Council prior to that bidder withdrawing.

The mayor and Knodell then announced Tuesday that they would attempt to find a way around a problem with that fourth bid, so it could also be considered by the Council.

Also, the one remaining local bidder KBTL (Keep Burlington Telecom Local) was the lowest bidder and came with a high debt load that the head of the BT advisory board believes are not viable going forward.

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.

Because of non-disclosure agreements, city councilors knew who the fourth bidder was and were able to review its proposal, but neither they nor the mayor could disclose who it was or what terms they were going to propose. Weinberger said in announcing the three bids that he had presented his concerns to the bidder and to the Council and that the bidder independently decided to withdraw. Weinberger said he could not disclose what his concerns were.

Source: Mayor. 9.28.2017