(This story was updated Dec. 6, 2017, at 5:15 p.m. with comment from the CEO of Schurz Communications.)
BURLINGTON — A document detailing the sale of Burlington Telecom to Schurz Communications was released Wednesday, memorializing in writing the sale that was hastily arranged in the early morning hours of a Burlington City Council meeting nine days ago.
The document, a nonbinding letter of intent, outlines the agreement to sell Burlington Telecom to Schurz Communications for $30.8 million. The letter and a document assembled after midnight last Monday comparing the three final bidders — the other two being Toronto-based Ting, and the local co-op Keep Burlington Telecom Local — have virtually the same purchase details.
Other details of the sale include:
- Schurz will relocate Burlington Telecom offices in Memorial Auditorium and will enter into a five-year lease on the main Burlington Telecom offices on 200 Church St.
- No rate increases for at least five years
- Retain local management and employees, and will grow locally as Burlington Telecom grows
- Expansion of customer service hours to evenings and weekends
- Continue Burlington Telecom’s Net Neutrality commitment
- A $2.5 million investment in Burlington’s technology community over 10 years, likely through investment in the BTV ignite technology and innovation incubator
- A $500,000 investment over five years for technology workforce training.
- Possible Burlington Telecom expansion to Winooski and South Burlington
- Allow the city to buy up to one-third of the business
- Agreement to an anti-monopoly restriction
At the beginning of the Nov. 27 council meeting, ZRF Partners had an offer on the table with financial backing from the formerly independent bidder Schurz Communications.
Ting offered $32 million, ZRF $25 million, and KBTL offered $12 million to $16.5 million.
All three bidders made public offers. During the breaks at the seven-hour meeting held in Contois Auditorium in City Hall, a major change to the ZRF Partners and Schurz proposal began to emerge.
The new proposal, which was not disclosed until shortly before the vote, gave Schurz control of Burlington Telecom instead of ZRF. The offer was bumped up to $30.8 million, which was identical to Schurz’s previous, solo offer.
With the initial letter of intent completed, the city and Schurz have already started working on the more complex and legally binding purchase and sale agreement which will include the role, if any, for ZRF Partners.
Todd Schurz, CEO of Schurz, declined to give details about what ZRF’s role may be but hinted at possibilities. Schurz said he and Faisal Nisar of ZRF are scheduling a call soon.
“Really where I think ZRF brings great value to the city is in a lot of the community investment area,” Schurz said from his Indiana office Wednesday.
During the Nov. 27 City Council meeting, questions were raised about the identity of ZRF’s investors. Nisar declined to reveal his company’s investors, and Schurz acknowledged those concerns Wednesday.
“There were a number of questions about the role as well as who might be the additional investors. So we’re still narrowing that down,” Schurz said.
The City Council will discuss the letter at its meeting Monday. The City Council is expected to act on the final agreement Dec. 18, according to a statement from Mayor Miro Weinberger.
The state Public Utility Commission will then need to approve the sale, which could take place in mid-2018, according to Weinberger. However, after the City Council approves the final sale, it will have satisfied an arrangement made with Citibank to sell Burlington Telecom before the end of the year.
Burlington Telecom is owned by Bluewater Holdings, and its assets are leased back to the city in an arrangement that was reached after a settlement with Citibank. The 2014 settlement ended a $33 million lawsuit by the bank, which 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.
Read the full letter of intent below.
