BURLINGTON — Two previously rejected bidders have unveiled a combined proposal to buy Burlington Telecom, adding another level of uncertainty to the prolonged sale process.
Councilors are feeling a time crunch. They need to sort through a flood of new information in time for a City Council meeting Monday, where they plan to decide among the three proposals — one from newly combined ZRF Partners and Schurz Communications; and one each from the co-op Keep Burlington Telecom Local and the Canadian telecom company Ting.
Ting and KBTL, the two finalists, tried and failed to come up with a combined proposal after the council couldn’t decide between them earlier this month. Councilors then invited all four final bidders to update their proposals.
ZRF Partners and Schurz Communications offered $25 million for Burlington Telecom on Monday. Under this plan, ZRF would be in control of the bid and the company, with Schurz as an investor.
Both entities previously made individual offers. Schurz had put forward $30.8 million, while ZRF’s former offer is still behind a nondisclosure agreement.
In this final round, KBTL raised its offer from $12 million to about $18 million because the co-op believes it can raise about $6 million through selling shares in Burlington Telecom. Ting increased its previous offer of $30.5 million to about $32 million, making it the highest of the three.
“We’re still at the point where we’re carefully reviewing them,” Mayor Miro Weinberger said Tuesday.
A major question for several councilors is why the combined ZRF and Schurz proposal — $25 million — dropped from the previous Schurz bid of $30.8 million.
Councilor Karen Paul, D-Ward 6, said this disparity will likely be a source of confusion in the coming days. It’s important to understand that Schurz is merely a limited partner, essentially an investor, in ZRF’s new proposal, she said.
“ZRF has come up significantly from their first proposal. Not double, but a lot,” Paul said. “Even something that simple is going to take time to resonate with people.”
City attorneys are reviewing the new proposals as well, Weinberger said. Legal issues have been raised about the KBTL bid especially. Citibank, which is a Burlington Telecom creditor and stands to receive a significant share of the sale price, has said it will sue the city should the low bid be selected.
“That’s something I think councilors would want to take a look at before taking a position on this,” Weinberger said of the legal review.
Burlington Telecom is owned by Bluewater Holdings, and its assets are leased back to the city, an arrangement reached after a settlement with Citibank. The 2014 settlement ended a $33 million lawsuit by the bank, which had loaned money to Burlington Telecom.
Burlington’s agreement with the holding company allows the city to select a buyer. If Burlington is to keep the largest possible portion of the proceeds, the sale must be completed by year’s end.
But a council decision is only one step.
“The process doesn’t end with the council vote,” said Councilor Adam Roof, I-Ward 8.
Roof explained that if the council picks a final bidder Monday, it is simply allowing Weinberger to authorize the agreement to sell Burlington Telecom. That agreement needs to be written, then looked over by lawyers and by Citibank and Bluewater Holdings. Then the council needs to vote again to finalize the sale.
All that needs to happen in the next 40 days.
Net neutrality
News on the national scene Tuesday injected another factor into the bid selection process. The Federal Communications Commission said it plans to repeal regulations that ensure equal internet access, commonly called net neutrality rules.
Critics worry that without these rules, internet providers will be able to speed or slow internet access, or charge extra fees for streaming services. The New York Times said the repeal of these rules is a major win for large internet providers like Comcast and AT&T, companies that have lobbied for years against the rules.
Ting has pushed to retain net neutrality rules, and Keep BT Local has said it would retain them as well. Although Schurz has also made commitments to net neutrality, under the new bid ZRF would control the sale and ultimately Burlington Telecom.
The ZRF Partners and Schurz letter of intent released Monday did not directly address net neutrality. But Faisal Nisar, founder of ZRF Partners, told the Burlington Free Press that Burlington Telecom’s management would run the company. VTDigger couldn’t reach Nisar for comment Tuesday.
Burlington Telecom has made public statements committing it to net neutrality, regardless of what the FCC decides.
Keeping the public in the loop
Councilors are grappling with getting this litany of new information to the public.
“The real challenge I have is, does the community have enough time to digest it, or does the council have enough time to communicate it,” Roof said.
Paul said Tuesday that traditionally major proposals like the ones bidders released Monday are public for at least two weeks before the council acts on them.
“Are people going to feel that too much was done too quickly? I’m sure people are going to feel that way,” Paul said.
During Monday’s meeting, councilors will first vote for their two top bidders. The bottom vote getter will then be out, and in the second round each councilor will vote for one bidder until a winner is selected, Roof said.
There will be no mechanism for a tiebreaker, Roof said.
“We have to figure it out. There will be no delays, no games,” Paul added. “We have to stop doing this.”
