Tonight’s special City Council meeting (5pm, Contois Auditorium, City Hall) may be the point of no return for continued municipal ownership of Burlington Telecom. City Council’s decision about a bridge loan in relation to the recent Citibank settlement could force the City of Burlington to sell Burlington Telecom at a future date. I use the words “may” and “could” because the details of the bridge loan have not been made public.
From Section 8 of the Mediated Settlement Agreement between Citibank and the City of Burlington:
“The Settlement is predicated on the assumption that the Financing contemplated in paragraph 4.1 is intended as a bridge to the eventual arm’s-length sale of the System to a private entity.”
The City of Burlington has asserted in this settlement that it plans to sell Burlington Telecom. However, there is still the possibility of continued municipal ownership. Also from Section 8:
“In the event that the terms of the Financing, or any proposed restructuring or refinancing thereof, do not require Burlington to sell the System during the term of, or at the maturity of the Financing, or provide for a similar liquidity event resulting in Net Proceeds being payable to Burlington or Citibank from the assets of the System, then the consent of Citibank shall be required, such consent not to be reasonably withheld or delayed.”
The terms of the bridge loan may or may not require the City of Burlington to sell Burlington Telecom. If the terms of the bridge loan do not require a sale, then it is possible to keep Burlington Telecom municipally owned as long as Citibank consents to this.
I do not believe that selling Burlington Telecom is in the best interest of our community. As has too often been the case with Burlington Telecom, these important discussions are being held behind closed doors. A robust discussion about whether or not to keep Burlington Telecom municipally-owned should be had in an open forum. In the meantime, I hope that City Council does not to shut out the option of continued municipal ownership with tonight’s decision.
