Verizon sale a ‘done deal’

Nearly two years after Pacific Telecom Inc. and Micronesian Telecommunications Corp. sought approval of the proposed sale of Verizon, the multi-million-dollar transaction is now as good as a done deal. PTI, the prospective buyer, said yesterday that it would take over Verizon’s management on or before Sept. 1.

Top PTI executives Jovino Lorenzo and Rogelio L. Singson said the company has already begun due diligence work on MTC and would complete the process as soon as possible to consummate the telecom deal, which has been estimated at $60 million. The CTC has set the deadline for the deal’s closing on Aug. 31.

The disclosure came about after the Commonwealth Telecommunications Commission issued an order Monday to resolve pending issues resulting from requests for reconsideration of the CTC’s final order that gave the go-signal for the proposed sale to proceed. Both PTI and MTC—and the interveners in the proceeding, Gov. Juan N. Babauta and CNMI consumer counsel Brian Caldwell—had filed their respective requests to modify the final order.

Once PTI takes over Verizon’s operations, there will no longer be interisland long distance charges for calls within the CNMI, based on the 27-point settlement agreement that the parties reached in May 2004.

The agreement also provided that there would be no local rate hike for two years from the transaction’s closing and that PTI would invest a minimum of $20 million in capital expenditures during the next five years. Lorenzo and Singson said there would be no change in Verizon’s management and employees, except for the board’s membership.

Lorenzo also disclosed PTI’s interest to become a regional player in the Pacific islands.

He said the company would also comply with the requirement that PTI would join the National Exchange Carrier Association. The parties expect PTI’s membership in NECA to provide assistance to rate and tariff development, industry database management, compliance auditing, economic forecasting, trend analysis and regulatory policy analysis.

“This is a win-win situation when the economy is not as rosy as three years ago,” Lorenzo said. “The CNMI government has done its share in protecting the interest of the public.”

Singson welcomed the CTC’s modification order last Monday, saying that the commission relaxed its requirements on CoBank, PTI’s main financier in its acquisition of Verizon, by requiring it to provide information to the CTC only in default cases. He said the decision was proper because it is PTI, not CoBank, which the CTC regulates.

The order also included a force majeure provision, which would give Verizon a grace period within which to comply with certain obligations if the delay in performance was due to any event arising from causes completely beyond the control of the company. The CTC outlined procedures on how Verizon could seek relief should force majeure events occur.

“We’re really happy that the final order was issued,” Lorenzo said, adding that the CTC has been fair in its determinations.

In a written statement, PTI president Jose Ricardo Delgado thanked the CTC for approving the purchase transaction and the transfer of control of the Certificate of Public Convenience and Necessity.

“We realize the complexity of the issues involved and the significant impact of the transaction on the people of the CNMI from the time of our application in Sept. 2, 2003 as shown in the many public hearings, views and public statements issued on the matter,” Delgado said. “We wish to move on.”

“We welcome the CTC order and we wish to show the people of the CNMI that PTI is ready to take on the enormous task ahead. With a deteriorating economy and very challenging circumstances, we ask for support and cooperation from the people of the CNMI as we all move forward together,” Delgado said.

Delgado also thanked the governor, members of the Legislature, and the CTC board, saying that the expression of different views on the proposed telecom deal stressed the importance of PTI’s would-be role in the economic development and social life of the CNMI people.

PTI, a direct, wholly owned subsidiary of Prospector Investment Holdings Inc., is a registered corporation in the Cayman Islands owned by father-and-son Ricardo and Jose Ricardo P.R. Delgado.

PTI said the sale would proceed despite the pending issue on Verizon’s sole ownership of the only fiber optic cable facility in the CNMI. The CTC has ordered the conduct of a contested case proceeding on competitive issues related to Verizon’s sole ownership of the cable.