Canadian challenger operator Mobilicity has been given court approval to pursue either a recapitalisation or a sale as it looks to remain viable.
The Ontario Superior Court of Justice said Mobilicity could call meetings where each of these proposals…
Canadian challenger operator Mobilicity has been given court approval to pursue either a recapitalisation or a sale as it looks to remain viable.
The Ontario Superior Court of Justice said Mobilicity could call meetings where each of these proposals will be voted on by debt holders, according to the operator.
If both approaches are approved then a sale process will be embarked upon first. The sum received by Mobilicity would be used to pay off the operator’s outstanding first and second lien debt, and its outstanding unsecured debt securities.
Telus has been linked to a purchase of Mobilicity, attracted to its spectrum, but a sale to an incumbent might face government opposition. Ottawa has taken an active approach in trying to foster competition in the wireless market and its industry minister has said he doesn’t want spectrum from smaller operators falling into the hands of the dominant players.
If a sale cannot be achieved a recapitalisation plan will be enacted, which is being prepared simultaneously. Under this course of action Mobilicity said its share capital would be reorganised, some of its second lien notes would be repaid, and it would receive additional liquidity so it could continue to operate.
Distressed-debt investors Catalyst Capital, which holds a significant amount of Mobilicity notes, had some reservations about the operator’s plans. It doubted whether the plan of action would “provide the capital required for Mobilicity to grow its business, acquire spectrum or provide viable”.
Catalyst said it wants the challenger restructured in a way that made it a successful player in the market, and vowed to take an active role in the restructuring. The investor has already taken Mobilicity to court to block C$75m of financing it raised and is trying to gain more influence in the future of the company.
Catalyst has also been reported to be considering buying up both Mobilicity and Wind Mobile in a bid to create a stronger fourth player in Canada.
