US broadband provider totheHome has made a US$2m stalking horse bid for local rural wireless provider Open Range, which filed for Chapter 11 bankruptcy protection in October.
In a court filing on 27 October, the company said that it had received…
US broadband provider totheHome has made a US$2m stalking horse bid for local rural wireless provider Open Range, which filed for Chapter 11 bankruptcy protection in October.
In a court filing on 27 October, the company said that it had received proposals from four potential acquirers. Two of these proposals concerned the acquisition of the whole company, while the other two were only for certain assets.
The totheHome bid would involve the acquisition of “all or substantially all” of Open Range’s assets, the document reveals.
There is a deadline of 11 November for bids from other potential bidders, with an auction set for 14 November.
Open Range filed for bankruptcy protection on 6 October, after failing to get its satellite broadband business off the ground following a series of regulatory and operational difficulties. Last year, it was forced to search for an alternative spectrum partner after regulator FCC denied its satellite operator partner Globalstar an extension to ATC licence milestones. In March 2011 Open Range eventually found this partner in satellite/terrestrial venture LightSquared, which continues to be plagued with GPS interference issues.
The group values its assets at US$114m, total liabilities at US$110m, and posted an operating loss of US$50.4m last year on sales of US$1.7m.
According to a court document that lists corporations, and not government units, that directly or indirectly own 10% or more of any class of Open Range’s equity interests, hedge fund Vision Opportunity Master Fund has a 57% share of its common stock. One Equity Partners (OEP), the private investment arm of JP Morgan Chase & Co, owns 97% and 99.6% of the company’s Series B and Series C preferred stock, respectively.
A court document also reveals that, on 5 October, OEP provided US$1m to Open Range, “and as of the date herein, it has not been determined whether such funds will be characterised as a loan advancement or equity contribution”.
Bankruptcy gets political
Meanwhile, the US Energy and Commerce Committee has launched an investigation into a US$267m government loan that was issued to the Open Range back in 2008. This five-year loan, which was later reduced to US$180m, was the largest issuance under the Department of Agriculture’s Rural Utilities Service (RUS) broadband programme. It was awarded to support the company in providing WiMAX/satellite broadband to rural communities in the US.
But Open Range still has US$73.5m outstanding on the loan, and the government committee is seeking assurances that taxpayer funds have been used appropriately.
In a bipartisan letter sent to the RUS on 9 November, the committee wrote: “Open Range’s bankruptcy potentially puts US$73.5m of taxpayer money at risk. In light of Open Range’s bankruptcy, the Energy and Commerce Committee requests a bipartisan briefing to explain the RUS application review process for the Open Range loan and the oversight RUS conducted to ensure taxpayer funds were used as intended.”
It has called on the RUS to provide documents relating to Open Range’s loan application, approval, and any subsequent developments. The group also requested further information on other broadband loans that have been granted under the US government’s 2002 and 2008 farm bills.
