Dec. 6, 2006 — Two government officials have penned letters to Jeffrey Prosser stating they are interested in purchasing several of his telecommunications companies.
The Source reported this week that court documents stated that Prosser, who is trying to sell the companies to pay off a bankruptcy settlement, said he had a letter from a "governmental purchaser." The chairman of the Government Employees Retirement System board said he was the one who sent the letter. The letter had been presented to the court under seal, and Carver Farrow, chairman of the GERS board of trustees, did not include a copy of it with his statement.
But there is another letter. This one, dated Dec. 1, is signed by Gov. Charles W. Turnbull.
Just two days after the Legislature held in committee a bill sent down by the governor to appropriate $300,000 for a feasibility study on the matter, Turnbull wrote a three-page "letter of agreement" to Prosser. In it, Turnbull outlines a plan that could result in the government's purchase of six of Prosser's companies.
Prosser is asking $650 million for:
— V.I. Telephone Corp.(Vitelco) — excluding the promissory note from Belize Telecom Ltd;
— Vitelcom Cellular Inc;
— Business operations of Innovative Business Systems and VI PowerNet;
— St. Croix cable TV Inc.;
— Caribbean Communications Corp.;
— Innovative Long Distance Inc.
In court filings, Prosser's attorney said Vitelco garnered 85 percent of the revenues from his holdings. The letter does not say how much the promissory note is worth, but it is somewhere between $27 million and $50 million. Prosser borrowed the money from Vitelco at 10 percent interest to purchase the Belize phone company. The deal has yet to go through and the money, which came from an $85 million preferred-stock sale, has never been paid back to the local phone company.
The letter of agreement states that if the government were to purchase the companies, the "sale will be free and clear of all debts and liabilities" accrued by Prosser and his companies.
It also depends on the government completing its due diligence: "After the government has satisfied itself with the results of the due diligence report, and has determined that the acquisition is in the best interest of the government, then the parties hereto will negotiate in good faith a purchase agreement."
The agreement would be subject to approval by the Public Services Commission, the bankruptcy court and the Federal Communications Commission.
The government's due diligence would require access to personnel, books, employees accountants, properties, physical plants, and records, the letter states.
The agreement also depends on the government being able to obtain financing.
Once it receives the materials to conduct the due diligence, the letter says, the government will attempt to complete its audit within 60 days.
The Guam telephone company was one of the last under the U.S. flag to go private, which it did last year. The company, which had about 78,000 phone lines, sold for between $130 million and $150 million. At the same time, the Guam government allowed competition to enter the market.
The terms of the agreement letter between Prosser and Turnbull will leave the matter squarely in the hands of the incoming governor elect, John P. deJongh, who has said he will not comment on the matter at this time.
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