A group of telecommunication professionals have offered to bail out Burlington Telecom in exchange for management control of the nonprofit utility. The “team” of nine men, who represent tech, legal and energy firms, sent a detailed proposal to the City of Burlington on Feb. 17. The three-point plan would provide a “safety net” for Burlington Telecom in the event that the city is unable to shore up the utility on its own.
Open letter to Burlington Telecom, 2/17/10
Burlington Telecom report from Public Service Board
Burlington Telecom operates a fiber optic network for the city and provides cable TV, telephone and high-speed Internet access to about 4,600 residents and businesses, according to the Burlington Free Press.
On Feb. 16, the Public Service Board denied the City of Burlington permission to borrow $386,673 from its cash reserves for a 60-day period in order to meet Burlington Telecom’s scheduled interest payment to CitiCapital Municipal Finance. The Board explained that it denied the city’s request because it failed to present “reliable information” and because the request was filed too late for “any realistic possibility of conducting a full and fair evidentiary hearing” on the matter.
The rescue effort, as billed in the letter posted below, would cover the broadband utility’s first quarter interest payment and enable the city to avoid default on its $33.5 million loan.
Burlington Telecom’s $386,000 interest payment was due on Feb. 17.
Under the proposal, as outlined by Andy Montroll, former president of the Burlington City Council, the city would cede management and control of Burlington Telecom to the nine-person team, which would be responsible for stabilizing the operation and for preventing “further immediate erosion and lay the ground work for a sustained recovery.” The team includes Tim Nulty, the former general manager of Burlington Telecom and the director of ECFiber, Stanton Williams, chairman of ValleyNet, attorney Paul Guiliani, and Don Mayer, founder of Small Dog Technologies.
According to Montroll and the eight other signatories of the letter, Stern Brothers, a St. Louis-based investment banking firm has “committed to assist us in this endeavor as may be necessary.”
Montroll writes: “We have put forth this proposal because we feel that BT faces a potentially devastating crisis and that without rapid, decisive action to correct major problems, it could soon descend into a ‘death spiral’ from which recovery would be very difficult or impossible.”
