Local news — St. Thomas
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New Owner for Innovative Likely by Year's End
By year's end, the National Rural Utilities Cooperative Finance Corporation will own ICC, parent company to Innovative Telephone Corporation and its telephone, cable television and Internet operations, Innovative President E. Clarke Garnett said Thursday.
ICC Oresident E. Clarke Garnett discusses the company's future Thursday at Rotary.
Garnett, speaking to Rotary of St. Croix at its weekly speaker's luncheon at Gertrude's Restaurant, said the company has digitized the television services, worked on line maintenance and was in the process of upgrading its cellular and wireless services. But the heavy lifting to upgrade and strengthen the company's network will begin after the transfer of control.
ICC, formerly the property of ex-telecoms magnate Jeffrey Prosser, has been in bankruptcy since July 2006. National Rural’s affiliate, Rural Telephone Finance Cooperative, is the lender to ICC and holds a $525 million judgment against it. Efforts to auction the component companies were hampered by the global financial crisis and in January, National Rural announced its intent to credit bid for the properties. A credit bid is when a creditor bids for a property at auction, offering not cash, but part or all of the value of the debt owed it.
The telephone and cable television operations are regulated by the V.I. Public Services Commission, which must approve transfers of control over utilities. The approval process is under way with both the PSC and the Federal Communications Commission, Garnett said.
"All of these approvals should be complete – and this is tentative as it depends on the actions of government bodies which are out of our control – but it should be complete by early November," he said, estimating that everything should be finalized by the end of December, if not before then.
"Until that process is completed, the really necessary work to come on the network cannot really start in earnest," he said.
Expensive, extensive upgrades to the network need to be financed and though the subsidiary companies are sound, while the parent company is still in bankruptcy the operating companies cannot get credit.
"We can't go out and borrow money, so all the work we've done so far has been through internally generated cash," he said. "And we've done pretty well I think."
Once the transfer is complete, Garnett said he anticipates an influx of capital for modernizations ranging from new billing software to eventual high definition television as the new owners work to build the company's value before possibly selling it when the markets improve.
National Rural, the incoming owner, is a not-for-profit finance cooperative with more than $20 billion in assets that serves the nation’s rural utility systems. Its affiliate RTFC finances the rural telecommunications industry and has approximately $1.7 billion in credit outstanding. ICC alone accounts for almost a third of that. Both National Rural and RTFC are headquartered in Herndon, Virginia.