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Trustee Briefs PSC on Sale of ICC Companies

Feb. 23, 2008 — Innovative Communications Corporation's (ICC) Chapter 11 Trustee Stan Springel briefed the Public Services Commission Friday on how he will begin the sale of Jeffrey Prosser's former companies. The PSC has a special interest because it has a statutory responsibility to approve the change of ownership of utilities it regulates. Two ICC companies, Innovative Cablevision and Vitelco, are regulated by the PSC.
Springel said the assets would be sold in three groups, in no particular order.
First are the French cable television operations in Martinique, Guadeloupe, and a small one on the French mainland called Val Vision. Second is the Virgin Island Daily News, a free-standing business. The third group includes Vitelco, Innovative Cablevision, and ICC-owned cable television companies in the British Virgin Islands and St. Martin. On Feb. 3 in Pittsburgh, the U.S. Bankruptcy Court approved auction procedures, Springel said.
"It's basically an auction process," he said. "It is an open process. But in order to participate, you need to demonstrate you are likely to be able to perform the terms of the deal. If you do not look like you can do a $100 million dollar deal to buy the Guadeloupe properties, for example, we are not going to allow you in the process."
Potential bidders will have secure access to an online virtual library of legal, financial and material information about the companies on the block.
"That information would be available to you (the PSC). But it is confidential and we don't want to take private information and put it out in the public."
Once a pool of likely bidders is formed, they will come to the territory for tours of the property and more detailed investigation. The companies are being sold to pay off ICC's creditors, the largest of which is the Rural Telephone Finance Cooperative (RTFC).
"The (RTFC) has a secured claim of over $500 million and has a right to credit bid," Springel said. "Their secured debt is as good as cash."
Springel said the ICC component companies had cash flow problems when he took control in November of 2007, which have been "largely though not completely dealt with."
Dividend payments on $85 million in preferred stock are one large unsettled liability.
"The stockholders were contractually due quarterly dividend payments of over $2 million," he said. "Vitelco does not have the ability to do that."
This debt and tens of millions owed to ICC's pension plans will be paid as part of the sale, Springel said.
Meanwhile, on the level of day-today operations at Innovative and Vitelco, cash flow is greatly improved, vendors are being paid and operations are improving, according to Innovative and Vitelco's new president Clarke Garnett.
"With the exception of a couple of very large vendors, we are on a current basis," Garnett said. "Before, that wasn't the case. Now we are able to make capital investments back in the business. … People have tools and trucks to provide services, which is something that for awhile didn’t exist."
Garnett's mission, he said, is to stabilize and improve the companies, to maximize their value for sale. Once the auction process is complete, the U.S. Bankruptcy Court must approve the sale or sales and the PSC must sign off on the change of ownership of the local utilities under its authority.
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