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RBC — A three-year wait is almost over.
NC Telecom — a high-speed Internet and digital wireless provider in northwest Colorado — and all of its assets, will be sold to the highest bidder during a bankruptcy auction at 10 a.m. Friday.
The process began three years ago, in October 2005, when NC Telecom filed a Chapter 11 bankruptcy reorganization.
Asked if he was ready to find out who the new owner will be, Rick Heming, general manager for NC Telecom, said, “You bet.”
Three “interested parties” have made a deposit of nearly $200,000 in order to bid on NC Telecom, Heming said. One of the bidders is CenturyTel, which made the opening bid of $1.3 million.
CenturyTel, a Louisiana-based company, provides high-speed Internet service for residents in Rangely. NC Telecom has an office in Meeker and its coverage area includes service in Rio Blanco County, with the exception of Rangely.
The bankruptcy auction will be conducted in Denver, at the office of the attorney representing NC Telecom.
“This is what we’ve been trying to get done for three years,” Heming said. “First, we had to stabilize the company. Then we had to make sure we had enough cash flow to operate. We’ve always paid our bills since we filed.
“But it took awhile to find (companies) that were interested and getting someone who was actually ready to put a deal in place,” Heming said. “When we first filed, the market changed. It was right on the heels of some other failures in the industry; a lot of them were going out of business. So there wasn’t as much interest (in buying them). But now there’s interest again. So it’s a good time to actually do it. It didn’t hurt anyone to wait three years. It actually resulted in an auction that will bring more cash to the creditors.”
The idea of the auction is to secure the highest bid possible.
“The whole idea is to maximize what the company is worth and get the best value that is in the best interest of our creditors,” Heming said.
NC Telecom’s total debt is between $14 million and $15 million.
“The primary creditor is Rural Utilities Service, a division of the U.S. Department of Agriculture, the primary lender of the funds for our business plan,” Heming said. “Their claim is more than $12 million. The main other creditors are Rio Blanco County and Moffat County.”
Rio Blanco County provided NC Telecom with more than $1 million in start-up money in 1999, in return for services.
Pat Hooker, Rio Blanco County administrator, expects a smooth transfer of services to a new owner.
“As far as I know, it will be business as usual for us,” Hooker said. “We expect an orderly transition through the whole process.”
Heming said the new owner will receive NC Telecom’s assets free and clear of all debt, and the creditors will be paid with the proceeds of the sale by the court.
“The asset purchase process is very encouraging, and I look forward to having a new owner that will optimize the use of the fiber assets and continue to provide enhanced services to our region,” Heming said.
The initial bid must be a minimum of $100,000 more than the $1.3 million initial offer, Heming said. Subsequent bids have to be at least in $50,000 increments. Bids will be made in 15-minute intervals, until there are no more bids.
“It’s an auction, so you don’t know what will happen,” Heming said. “But you know it will be $1.3 million or greater.”
While NC Telecom will have a new owner Friday, the changeover won’t take effect until later.
“Although there will be a winning bidder, they will not take ownership immediately,” Heming said. “The actual closing date will be sometime in January. It’s just like buying a house. You write an offer and it’s accepted, and at the closing you pay the rest of the money.”