Receiver hopes to close Norigen deal quickly; CRTC reviews customer migration

The interim receiver for Norigen Communications Inc expects later this week to have the beginnings of a deal to sell off assets. Greg Prince, VP financial advisory services at PricewaterhouseCoopers (PwC), told Report on Wireless that several offers from diverse groups have been received for the assets of the bankrupt telco."Really, it’s pretty broad. There’s some telcos, some that are established some that aren’t established, just starting up," he says. "There’s some financial players. There’s some private investor groups. There’s a real broad cross section. I don’t think I could categorize it in one area," Prince says of Norigen’s potential suitors. PwC was named as interim receiver last August when Norigen and its component parts — Norigen Communications Group Inc, Norigen Finance Inc, Norigen Wireless Communications Inc and Liberty Technology Services Ltd — filed for bankruptcy after its primary lender, Chase Manhattan Bank of Canada, pulled the plug (RoW, Sept. 4/01). In the original court order appointing PwC, limits were set for selling assets without court approval. The receiver may sell off property for less than $2.5 million or an aggregate total of $10 million without judicial consent. "We could presumably have up to five transactions at $2 million apiece without having to get court approval, but we’d still need lender sign-off," Prince explains. "It all depends on the size and the combination. Do we sell to 20 people at a million a pop or 100 people at a million a pop or one person for 50 million? Who knows? It’s hard to say." PwC will have a clear assessment of the offers this week and then will proceed to get approval from creditors and the courts. Securing a court date should take no more than two weeks, the VP states. Actual disposal of the assets will be contingent on how quickly both sides want the deal to conclude. Prince remembers working on the bankruptcy of another competitive phone company that went out of business last spring. The case of Axxent Corp served as a reminder of how difficult it is to predict a timeline for conclusion of an agreement. "Depending on the type of deal and the nuances, it could take a little longer. Some transactions on Axxent took five or six weeks to put a purchase and sale agreement together. Some of them took five or six days. A lot of it will be dependent on the purchaser as well." Smoother transition from defunct carriers being explored by CRTCAs PwC weighs the offers for Norigen, the CRTC is looking at its process to see if there are ways it can provide a smoother transition for customers of a bankrupt telco to another carrier. Michael Cawood, acting director of competition at the commission, told RoW the question of migrating clients has raised several questions regarding technology, service agreements, staffing and other issues. The Business Working Group, a component of the CRTC Industry Steering Committee (CISC), is examining these issues and will make recommendations. The commission is taking a broad approach, not just restricting itself to the failures of Axxent and Norigen. Evaluation includes look at wireless operators "We’re also looking at things like: what if the failed LEC is a wireless LEC as opposed to wired one? What difference does that make?" Cawood states. "What if it’s a cable company that provides that service? Neither of the LECs that failed were either of those two, but we thought if we’re going to look at it from a technical point of view, is there something different that we might want to do with those other types?" Axxent subscribers were given a 30-day warning that they needed to find a replacement carrier while Norigen customers were given only a week’s notice. Still Cawood notes that the rates of successful transfers versus lost carriage were nearly identical for the two firms. He expects some of the questions may be resolved through the CISC process while others may require the attention of the full commission, with the exception of those issue falling under the purview of other government departments. The CRTC would make recommendations to other agencies to correct any problems.

Receiver hopes to close Norigen deal quickly; CRTC reviews customer migration

News | September 18, 2001

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