Aug. 29, 2006 — While Jeffrey Prosser and his companies are engaged in noisy and complex courtroom battles with three sets of creditors, his telephone company, Vitelco, has quietly (and slowly) been paying off a debt to a fourth creditor, an obscure arm of the U.S. Treasury called the Federal Financing Bank (FFB).
Neither the Treasury nor Prosser have sent out press releases on this relationship, but detailed tables on all of FFB's loans, which it issues periodically, tell the story.
The FFB debt, however, is the smallest of the set of four. Past reports indicate that Prosser's longtime banker, Rural Telephone Finance Cooperative (RTFC), claims it is owed in excess of a half billion dollars. Next is the Greenlight Companies, a group of former minority stockholders in Prosser?s Innovative Communications Company's predecessor firm; they seek more than $100 million. Then there is a different group of investors, those who bought $85 million in preferred stock in Vitelco; they also want their money back.
In comparison, the latest figure for the FFB debt was (as of July 30) $61.2 million.
RTFC and Greenlight are pursuing these debts in U.S. Bankruptcy Court in Delaware, while the preferred stockholders have sued Vitelco in the U.S. District Court in the Southern District of New York.
The FFB is a semi-secretive arm of the U.S. Treasury that issues low-interest loans to, among others, rural utilities whose debts have been insured by the U.S. Department of Agriculture's Rural Utilities Service. Every three months a list of these rolled-over 90-day loans is issued by FFB. Vitelco's loan is usually the largest of the group, but the list shows that Vitelco pays the same interest rate as the other utilities.
A few years ago, Vitelco's annual interest rate was below 1 percent; in the latest listing it is shown at 5.026 percent.
The FFB releases, when read together, show that Vitelco is paying down this loan at the rate of a little more than $800,000 a quarter, or more than $3.2 million annually. The debt level for March 30, 2006, is shown as roughly $62.06 million, while the level at the end of 2005 was listed at $62.9 million.
Vitelco's interest payments are not listed on the FFB press release, which also does not indicate Vitelco debts to other federal agencies, such as the Pension Benefit Guaranty Corporation, which are listed in the bankruptcy documents.
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