The CTC’s final order

The Commonwealth Telecommunications Commission has modified its final order regarding its approval of the multi-million-dollar Verizon sale transaction, clarifying certain restrictions such as limiting the $20-million capital expenditure plan to primarily benefit CNMI customers.

“If a capital investment is not sited on NMI soil, the company must apply to the commission in advance for approval, and show how the primary purpose is the benefit of CNMI jurisdictional customers,” the CTC said.

The CTC issued the opinion and order Monday, partly granting and denying the modification requests filed by Pacific Teleecom Inc. and Micronesian Telecommunications Corp., as well as interveners Gov. Juan N. Babauta and CNMI consumer counsel Brian Caldwell.

The CTC granted the companies’ request to relax reporting requirements for CoBank, the deal’s main financier, which PTI and Verizon claimed is experienced in providing telecommunications acquisition financing. CoBank was involved in the acquisition of the Guam telephone system.

The commission directed the inclusion of a provision in loan documents that CoBank will report to the CTC any notice of default, which will be deemed void if a copy is not furnished to the CTC.

The commission also granted the companies’ request to clarify that breach of any condition of the final order would have no effect on Verizon’s agreement with CoBank.

However, it denied the companies’ request to deviate from the settlement agreement regarding membership with the National Exchange Carrier Association, which the firms claimed might turn out to be financial liability.

CTC allowed Verizon, however, to bring up the matter in the future. “Should NECA conditions prove onerous, the company can return to us at the appropriate time with a petition, prefiled, sworn expert testimony and exhibits, and the information underlying the expert decision to forego membership.”

In granting some requests of Babauta and Caldwell, the commission imposed dividend reporting obligations on PTI. Reporting obligations will cover the company’s intention to declare a special cash dividend at least 28 days before the declaration, its intention to transfer more than 5 percent of retained earnings to a corporate parent over a six-month period at least 63 days before the actual transfer, and the company’s most recent quarterly common stock cash dividend payment.

The CTC also ruled that the interveners should receive a copy of Verizon’s capital expenditure plans at the same time as the commission. It also declared that the companies should provide the CTC their technical assistance agreement at least 10 days before the transaction’s closing.

But the commission ruled against imposing audited financial statements of PTI’s owners, father-and-son Ricardo and Jose P.R. Delgado. It said the previous submission of financial information was adequate.

“This included a bank statement that supported the ability of the Delgados to support the equity portion of the purchase transaction. The Delgados, in fact, must put $11 million in equity into the purchase,” the CTC said.