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PSC Defers Item on Phone Company Financial Viability

Aug. 23, 2004 – The Public Services Commission has postponed discussion on a docket addressing the financial viability of Innovative Telephone — formerly Vitelco, the V.I. Telephone Corp. — that has been scheduled for its Wednesday hearing.
In the meeting agenda faxed to the news media on Aug. 13, one item listed was "a staff report on Vitelco's financial viability and staff recommendation for restraint on further disbursement of proceeds of preferred stock issuance pending investigation."
The report would have addressed a lawsuit filed against Innovative Communication Corp., parent company of Innovative Telephone, by its principal lender, the Rural Telephone Finance Cooperative.
RTFC, which sued ICC on June 1 and amended its complaint in late July, alleged, among other things, that the telephone company had violated a 2001 loan agreement when it sold more than $81 million worth of preferred stock earlier this year, then failed to forward that money to RTFC in connection with more than $500 million in loans made by the cooperative to ICC.
Innovative responded to the suit arguing that a 1989 settlement agreement among ICC's predecessor (Atlantic Tele-Network, now a separate and unrelated company), Vitelco and the Public Services Commission provided for Vitelco to have access to financial markets, and thus the floating of the preferred stock was appropriate and that the money need not be turned over to RTFC. (See "ICC Responds to Amended Lawsuit Filed by Lender".)
PSC legal counsel Boyd Sprehn said on Monday that the commission will take the matter up at a Sept. 10 hearing. "It was an issue of time" that resulted in its being removed from Wednesday's agenda, he said.
Valencio Jackson, PSC chair, said that both Innovative and RTFC asked that discussion of the issue be postponed until they could sit down and discuss the matter.
Wednesday's agenda still calls for the commission to address Innovative Telephone's performance standards, its Universal Service Fund certification, its re-application for Economic Development Commission benefits and the demand for DS3 service.
The PSC recently conducted a survey to assess the need for the high-speed DS3 telephone lines in the territory.
Choice Communications, a local Internet service provider, tried for about two years to get the Public Services Commission to order Innovative, the only company owning the broadband lines in the territory, to lease DS-3 lines to it — at regular retail rates. The PSC declined to do so at a hearing in May, stating a lack of demonstrated public demand.
After receiving several calls from residents about the matter, the PSC decided to conduct the survey.
Sandra Setorie, PSC assistant executive director, said the commission received a few responses from the public and is still reviewing them. She would not specify the number received but said the survey results would be presented at Wednesday's hearing.
The commission also is scheduled to take testimony from Water and Power Authority officials on the utility's levelized energy adjustment fuel surcharge, street lighting, and the authority's long-term plan for generating capacity, fuel diversity and system reliability.
Also on the agenda is discussion with Waste Management Authority officials on anticipated revenue requirements.
Wednesday's hearing is to begin at 9 a.m. in the conference room of the PSC offices in Barbel Plaza on St. Thomas.

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