Public Services Commission members wrapped up a months-long investigation Tuesday into the viability of transferring Innovative telephone and cable companies to Atlantic Tele Network International with an official approval of the transfer, which PSC hearing examiner Ronald Belfon said was “in the best interest” of local television and cable ratepayers.
“We’ve all pretty much thoroughly gone over the documents that have been provided and we are certainly comfortable with what’s in them,” PSC member Andy Rutnik said after Belfon gave his final opinion during a PSC meeting on St. Thomas.
Boyd Sprehn, the PSC’s legal advisor on telecommunications matters, added that the transfer comes after “lengthy negotiations” between both sides.
“But I believe that we have reached an agreement that provides the opportunity for ATN to run a profitable and successful utility that provides for a fully restored utility, which in Vitelco’s case, given its condition seven years ago, is remarkable,” Sprehn added.
Belfon also served as the hearing examiner in 2009, when the PSC first explored the transfer of control of Innovative phone and cable companies to the National Rural Telephone Finance Corporation (CFC). The phone and cable companies at the time were solvent and regulated by the PSC but their parent companies, formerly called Innovative Communications or ICC, were in bankruptcy since July 2006. CFC, as the biggest creditor and ICC’s financial arm, sought PSC approval in 2009 to assume ownership of the regulated utilities.
Speaking on behalf of CFC, attorney Daryl Dodson said Tuesday that it was never the company’s intention to operate the regulated utilities long term.
“We wanted to fix them up, bring up the quality of the service measures and then find a qualified buyer that was in it for the long haul. ATN is a qualified company with a great balance sheet … it even has V.I. experience, operating Choice.”
According to an announcement of the sale in 2015, ATN said that it would purchase the Innovative operations for approximately $145 million, subject to certain purchase price adjustments, with $85 million payable in cash and the option to finance the remaining $60 million of the purchase price with a loan from an affiliate of CFC.
With the purchase, ATN’s current operations in the U.S. Virgin Islands under the "Choice" name will be combined with Innovative to deliver residential and business subscribers a full range of telecommunications and media services, according to the announcement.
Speaking Tuesday, ATN representatives reaffirmed the company’s intentions to “fully operate” Innovative’s networks and improve them over time.
Before asking the PSC to approve the transfer, Dodson added that the company brings to the table “a lot of protections for ratepayers” and is a “great pick” as an operator.
ATN was formed in 1988 by Jeffrey Prosser and Cornelius B. Prior Jr. After a decade of internal squabbling and lawsuits based on what Prior described as "the years-old inability of Mr. Prosser and me to agree on strategic and specific issues," the two men split the company’s assets in 1997, with Prior keeping the company’s assets in Guyana and Prosser keeping control of the Virgin Islands holdings. (See "Luxner News Service article in links below)
A decade later, the National Rural Utilities Cooperative Finance Corp. acquired Innovative when Prosser entered involuntary Chapter 7 bankruptcy and ICC, the parent company of VITELCO, Innovative Cable, TV Channel 2 and other local companies, entered Chapter 11. The finance company was by far the biggest creditor in the proceedings and took over the company to protect its half-billion dollar investment.
ATN is also acquiring Innovative’s smaller cable TV operations in the British Virgin Islands and St. Maarten as part of the transaction.
In other news, St. John franchise ferry company Varlack Ventures attempted to clarify with the PSC the residency requirements for passengers taking the ferry from St. Thomas. According to officials, the company should be able to verify addresses and other local information before a passenger can pay the “local” or reduced rate, but PSC members said that Varlack’s customer service is poor and that only “white people” are being “harassed” by the company’s employees at the dock.
“I think that it is appalling that you would single those people out to get an extra dollar,” PSC member Johan Clendinen said Tuesday, referring to temporary residents, such as bartenders and food handlers, or groups of students that he said the ferry company has been “discriminating” against.
In the end, the PSC voted to enforce regulations already in place, which requires residents to show a government issued identification card in order to get the reduced rate. The PSC also required the company to place signs at the ferry terminals with a phone number residents can call with customer service complaints.