Telecom reseller Primus Telecommunications Canada will seek Chapter 15 protection in the US Bankruptcy Court for the District of Delaware on 19 February ahed of its planned sale to the US’ Birch Communications. Court documents filed this month also show that Comwave Networks, another alternative Canadian telco, had been one of six suitors for part or all of the business.
Telecom reseller Primus Telecommunications Canada will seek Chapter 15 protection in the US Bankruptcy Court for the District of Delaware on 19 February. The company has already won court protection from creditors in Canada to give it time to complete its planned sale to the US’ Birch Communications.
Primus, which also operates in the US via its Delaware-based PTUS subsidiary and in Puerto Rico, has filed a petition under Chapter 15 of title II of the US Bankruptcy Code for an order recognising the Canadian proceeding as the main foreign proceeding.
Toronto-based Primus entered into an agreement in January to be acquired by Atlanta, Georgia-based Birch, which provides communications, network and cloud services to business customers. At the time, the telco explained that, to complete the sales process, it had begun a restructuring process that requires court approval.
While the purchase price has not been announced, documents filed with the Ontario court state the base price is C$44m (US$31.05m), from which “certain cure costs” and other, less certain amounts will be deducted.
Comwave also courted Primus
Court documents filed this month also show that Comwave Networks, another alternative Canadian telco, had been one of six suitors for part or all of the business. Unlike Birch, however, Comwave was interested only in the Canadian operations, which would have required it to find one or more buyers for the US assets. Primus said that while this could have reaped “the highest value”, it would be more complex and involve greater risk.
After Birch was selected as the buyer, Comwave filed a lawsuit in connection with the sales process, saying Primus used it as a “stalking horse” to hunt down a better offer. However, Comwave’s legal adviser Miller Thomson said in a 10 February email that Comwave intends to discontinue the action and will not oppose the sale to Birch.
One of Primus’ creditors, Manulife Financial, also objected to the sale process but its lawyer, Fogler Rubinoff, advised, also on 10 February, that it would not pursue these objections.
The Ontario Superior Court of Justice granted Primus, which is receiving legal advice from Stikeman Elliott, protection under the Companies’ Creditors Arrangement Act on 19 January, appointing FTI Consulting as its court monitor, and issuing a stay of all proceedings against Primus until 18 February. This has since been extended to 26 February and Primus has asked that this be prolonged until 19 September to give it time to close the sale to Birch .
