Burlington officials publicly revealed details Wednesday about three bidders for Burlington Telecom, a sale process that previously had been shrouded in secrecy.
Schurz Communications, a telecom company based in Indiana, put forward the highest bid, a cash offer of $30.8 million. The Toronto-based Ting, which is owned by Tucows, offered $27.5 million in cash. The locally based co-op, Keep BT Local, put forward a bid of $12 million, including $10.5 million in cash; the city would retain a $1.5 million interest in the utility.
The announcement came Wednesday at a press conference where the city released a thick packet of information about the bidders and their offers. The information was also made publicly available on the city website.
Not everyone, however, is happy with the process. A promised fourth bidder withdrew its offer at the behest of the Mayor Miro Weinberger — without input from the city council, according to Councilor Max Tracy (P-Ward 2).
Burlington Telecom Advisory Board chair David Provost indicated in August that the fourth bidder was a private equity investor “with valuable local relationships and extensive telecom experience.”
The mayor’s office notified the council that the final bidder was no longer interested just hours before a city council meeting Monday, during which the council discussed the bids in executive session, Tracy said. He called it a “dog and pony show public process” that “seems to indicate [the administration] already have a favorite in the process.”
Kurt Wright (R-Ward 4) said that the council had expressed “significant interest” in the fourth bidder. He called the mayor’s communication to that bidder a “serious breach of trust” between the administration and the council.
After the press conference Wednesday, Council President Jane Knodell told Seven Days that she agreed that the councilor’s trust had been violated. “The council was not involved in certain decisions that I believe we should have been involved in,” she said.
Weinberger called a second, spur-of-the moment press conference Wednesday afternoon and denied any wrongdoing. He said the time crunch surrounding the decision-making had not allowed for as much notice to the council as he might have liked.
Weinberger said he had “concerns” about the fourth bidder, and maintained that he had shared those concerns with the council before notifying the bidder. He refused to disclose his concerns, or the reasons why the bidder dropped out, citing the nondisclosure agreement the city had signed with the bidder (who has also not been publicly identified). More information would be disclosed next Monday, Weinberger said — after another council executive session.
Weinberger said he did not explicitly ask the fourth finalist to bow out. “The bidder made an independent decision,” he said.
The mayor’s office first notified the council of the bidder’s decision three hours before Monday’s city council meeting, according to an email obtained by Seven Days. In the message, Weinberger asserted that Terry Dorman, the founder of the company that runs Burlington Telecom, asked that the fourth bidder drop out.
“You will see that, in the wake of the legal, regulatory and conflict of interest concerns that have arisen, Terry has requested that [the bidder] withdraw its proposal,” Weinberger wrote in the message sent at 3:06 p.m. Monday. “I support Terry’s decision and expect there will be further conversation about it in our session this evening.”
Two councilors, Richard Deane (D-East District) and Chip Mason (D-Ward 5) defended the mayor Wednesday. “These were complex negotiations,” Deane said. “The mayor did his best to inform the council.”
The bids were made public after councilors pushed for more public engagement in the decision, a change to the process that was announced last week.
The bidders are varied. Tucows is a publicly traded company with five locations around the U.S. and $280 million in yearly revenue. The company agreed to annual contributions to BTV Ignite and other community projects. Broadband prices would not increase for 30 months under Tucows ownership, the company said.
Schurz is a family-owned multimedia company that owns 10 daily newspapers and cable TV networks, as well as internet technologies. At more than $30 million, the company had the highest cash offer. Schurz vowed no price increases to subscribers for five years.
Both the Tucows-owned Ting and Schurz agreed to a full build-out in Burlington, with the exception of 120 homes that have been deemed very expensive and difficult to reach, said city attorney Eileen Blackwood. Both companies agreed to consider expanding to other communities and to offer the city a flexible 20 percent stake in the telecom.
Keep BT Local is buoyed by a $10 million loan it’ll pay back at 14 percent interest over 10 years. The co-op said it would continue to manage BT as it is currently run and it would make all subscribers member-owners of the cooperative at no further cost. KBTL offered the city a set 12.5 percent ownership stake.
The city is accepting public feedback by email at btfeedback@burlingtonvt.gov. The council will narrow the field down to two finalists on October 2 and pick a buyer on October 16.
All three companies have committed to net neutrality and agreed to future sales restrictions in an effort to prevent a local monopoly.
Related Stories
Got something to say?
Send a letter to the editor and we'll publish your feedback in print!
Miro strikes again. Shocking.
All Miro sees is money in his eye and pockets, another corrupt politician!!
Also I checked that link btfeedback@burlingtonvt.gov and it only connects you to yelp and they say that page doesn’t exist on there
No matter what the process was for selling Burlington Telecom, people opposed to this administration would see it as non-transparent, evil, corrupt, and all the rest. It’s a self-fulfilling prophesy and it’s getting old.
I think that link is an email address. You can probably email your comments to it.
I think the history of shady doings by this administration makes people opposed to it. This, I suppose, becomes one more reason to be opposed to it.
kenatwood52 if you can’t tell the difference between a web address and an email address how is anyone supposed to take your conspiracy theories seriously?
Enough politically correct leftist local baloney. Local ownership is what resulted in the financial crisis that required the illegal “secret loan” in the first place. Thanks to a decent settlement for the city, the city is contractualy obligated to sell BT. Sell it to the highest bidder. Think of the city’s financial position for once. Please.
I was able to provide confirmed feedback using the BTFeedback email address, it’s great that the city administration is taking the time to let the public weigh in. My major concern as a taxpayer is that I paid for Burlington Telecom but am unable to use it. I think it was a smart investment for Burlington, and I wish whoever buys it will extend access to everyone in Burlington.
Comcast is awful and has way too much of my money, they need a reality check and I’d love for more communities like Burlington to give it to them.
When are the Burlington Tax payers going to get feed up with this boondoogle ( BT ) . In round
one crooks took City Funds to fund this project , knowing it would not be authorized speeding ,
work behind closed doors , don’t tell the Tax Payers ( whoops ) you got caught !!
Now the current administration , working behind closed doors and as we now know we are down
to a few candidates to purchase ( BT) . As all can see the Mayor is leaning towards his pals in the
City ………… shameful
BT boast it has a great record , five hundred new subscribers . But Burlington has Approximately
forty thousand residents , ( BT ) has a total of six thousand subscribers , so the numbers do not
show it’s growth potential , Oh over half of the scribers are City employed.
Buyer beware , It’s a boondoogle !!
@ Philo:
“I think the history of shady doings by this administration makes people opposed to it. This, I suppose, becomes one more reason to be opposed to it.”
Please identify all the “shady doings” and explain why they are shady.
@ Green:
Comcast is not one of the bidders.
The local coop wants to fund the purchase with a ten year loan at 14 (FOURTEEN) percent interest. Can that be correct? Given where the current prime rate is, if this is correct, lenders must have no faith in the coops ability to run a successful telecom company. I can only get 14% on Mexican pesos futures. That rate wold add a 1.4 million interest only debt load to BT in year one. How can they swing that? Something is not right.
> That rate wold add a 1.4 million interest only debt load to BT in year one. How can they swing that?
I agree, it sounds high, and I’d love one of the KBTL board members to chime in here. But as I understand it…
1. The lender is a strategic partner, Maine Fiber, not a bank or private/institutional investor
2. The rate is high, but I doubt a bank will give you a loan, let alone at a better rate, if you’re borrowing >$10M with no business history or collateral [though the new entity will own some fiber, not sure how that factors in]
3. BT is on track to make >$3M profit this year and KBTL will use some of that to pay down the loan
4. After some years they can refinance
Alex: Thanks for the info, but I still remain confused:
1. 14% is 14% no matter who lends you the funds. The greater the perceived risk, the higher the interest. Why would “strategic partner” want to charge such exorbitant interest? 14% is a very heavy burden to carry.
2. If no standard lender will lend the funds, at any interest rate, that should tell you something. No business history and no collateral should also be a red flag.
3. If this is a true net profit, inclusive of debt service and capital reserves, and not just depreciation, this is great.
4. Maybe, maybe not, depends on the details of the loan. Maine Fiber may be making their profit on the loan, not the infrastructue, and not permit a refinancing or require a set amount of the principle bring repaid before a refinancing.
I would also like to hear from a board member. Sounds like the coop has less than a 5% skin in the game.
Sell it to the highest bidder, get the money back for us taxpayers who have been robbed & lied to for years. Re-read that statement that the 2 top bidders have already excluded 120 residential address locations it looks like, as too expensive to be cost effective to bring the service to. Does that mean that people are not paying attention and think that they will magically be getting service installtions now when the present B.T. wouldn’t do it?
Wake up and smell the fresh air folks!
Maybe DirectTV or Comcast is not a viable choice for some of you, and they are not a great choice for others either, but after all these years, B.T. could’t even offer service to those living in Northgate. Tell me that there was someone trying to do something to give people living there choice for all these years based on the whole mission statement of why we had a local Telecom in the first place to offer folks many of whom are living in affordable housing and even some with very limited incomes?
Yup, big fail and time to see B.T. go to a new company that can give it a new start and Burlington Residents a new experience and a choice.