Burlington Telecom will be sold to Schurz Communications after months of back and forth between three bidders and the city, capped by a long, combative Burlington City Council meeting last Monday.
City officials are still waiting to finalize the deal in writing that was hashed out late Monday and early Tuesday. Mayor Miro Weinberger said Thursday that attorneys have been looking at drafts of the plan, and he expects to be able to release a final letter of intent from Schurz within days. The company is partnering with former independent bidder ZRF Partners in the purchase.
Weinberger, who has previously been open about his preference for the $32 million offer from Toronto-based Ting, said Schurz gave a strong proposal. He and the city are ready to move forward, he said.
“We needed a decision, and it was overdue,” Weinberger said.
Once the deal is on paper, the council needs to approve a purchase and sale agreement by the end of the year. After that, the sale will move to approval by the state Public Utility Commission, which could take months, Weinberger said.
With the sale, officials say any legal threats are likely to dissipate.
Burlington Telecom is owned by Bluewater Holdings, and its assets are leased back to the city in an arrangement reached after a settlement with Citibank. The 2014 settlement ended a $33 million lawsuit by the bank, which had lent money to Burlington Telecom when it was owned by the city. The city agreed to pay Citibank $10.5 million, sell the telecom utility, and give Citibank a share of the proceeds.
During Monday’s meeting, Councilor Joan Shannon, D-South District, told reporters that Citibank had issued new legal threats against the city, should it not pick the high bid of $32 million from Ting.
Citibank had also previously threatened lawsuits if the city picked the low offer of anywhere from $12 million to $16.5 million from the local co-op Keep Burlington Telecom Local.
Citibank was insistent the council accept the high bid, according to an email provided to VTDigger from city attorney Eileen Blackwood between her and Citibank attorney Kevin Fitzgerald. At the time the email was sent, Nov. 21, ZRF Partners was offering $25 million.
Todd Schurz said during last week’s meeting that Schurz would own between 60 percent and 100 percent of Burlington Telecom, with the remaining ownership split in some way between the city and ZRF — details that will become clear when the final Schurz letter of intent becomes public.
“The fair market value of BT has now been clearly established by the Ting qualified bid of $32 MM (as confirmed by both its previous bid and the earlier rejected bid of Schurz),” Fitzgerald wrote. “Citibank expects to be paid based on that level of consideration.”
Blackwood said they aren’t likely to hear again from Citibank until Schurz releases its final letter of intent, and both Weinberger and City Council President Jane Knodell, P-Central District, are confident the city is out of legal hot water.
“Citibank’s position from the start was not that we have to take the highest offer, it was that we had to take a commercially reasonable offer,” Weinberger said.
Knodell said even if Citibank was unhappy with the city taking a slightly lower offer, the legal fees the bank would spend fighting the city wouldn’t be worth it.
As councilors went off into side rooms and huddled during recesses from Monday’s meeting, some councilors and many in the audience accused the group of councilors forming the new Schurz deal of rushing through a secretive process.
Knodell, who ended up supporting the last-minute Schurz-led plan and was involved in shaping the deal, defended the private deal-making.
“I think it was a very transparent and democratic process, actually,” Knodell said.
The council was likely headed for a repeat of an earlier meeting when councilors deadlocked between two bidders, and a new deal was a way to get consensus, she said.
“That’s how legislative bodies function, when they’re functioning effectively, to move beyond two polarized camps,” Knodell said.
“We had to make a decision,” she said.
Others still feel spurned by the process that produced the Schurz deal.
“There was no community input,” said Ali Dieng, D/P-Ward 7, who along with Max Tracy, P-Ward 2, were the only two councilors to cast final votes for the co-op. Tracy said after the meeting concluded Tuesday he was still in shock at the choice his colleagues made.
As councilors were gearing up to cast votes in the early hours of Tuesday, Dieng was calling for something — anything — to be in writing. In response, city attorneys amended a document comparing the final three offers with updates from the new Schurz offer.
The outbursts at Monday’s meeting, specifically from Councilor Dave Hartnett, D/R-North District, irked Dieng and elicited hushed gasps from the mostly pro-KBTL crowd.
Shannon was questioning Faisal Nisar, of ZRF, about a meeting he had with Knodell and Kurt Wright, R-Ward 4, at the Burlington airport. Councilors previously barred themselves from meeting individually with bidders out of fear they may improperly influence the bidders, and that they may undermine the work of the city’s appointed negotiator, Terry Dorman.
Wright has said the meeting was sanctioned by Dorman and Blackwood, the city attorney. While Shannon was asking Nisar about the meeting, Hartnett interrupted her.
“You’re out of line, Councilor Shannon,” Hartnett said.
Dieng said the outburst was embarrassing.
“People played so much politics,” Dieng said. “I felt like we were kindergartners.”
As for the actual employees of Burlington Telecom, who openly supported Ting’s bid, they are happy the process is coming to an end, according to a statement from the telecom’s director of marketing and public relations, Abbie Tykocki.
“We are all relieved and ready to move forward. As the sale process moves toward completion, we will continue to do what we have always done – focus on providing great service to our customers and to our community,” Tykocki wrote.
