Indebted Canadian challenger Mobilicity has received creditor protection so that an anonymous buyer has the chance to complete a rescue deal to buy it.
The small wireless operator said the proposed transaction was currently being reviewed by Industry…
Indebted Canadian challenger Mobilicity has received creditor protection so that an anonymous buyer has the chance to complete a rescue deal to buy it.
The small wireless operator said the proposed transaction was currently being reviewed by Industry Canada, the country’s industry ministry.
Citing sources, the Globe and Mail says larger rival Telus – which had a previous takeover attempt for Mobilicity knocked back by the government earlier the year – is the mystery buyer.
In June the then industry minister Christian Paradis decreed that Telus would not be allowed to acquire the operator should a deal include the transfer of spectrum. This led Telus to drop its C$380m (US$368m) takeover deal.
When asked about the transaction the government said: “From time to time Industry Canada provides informal comment, in confidence, to parties who submit transactions for consideration. We do not comment on such reviews for reasons of commercial confidentiality.”
Mobilicity, also known as Data & Audio-Visual Enterprises Holdings, received protection under the Companies’ Creditors Arrangement Act. Ernst & Young has been appointed by the court to assist the mobile operator and its stakeholders.
The court has also approved Mobilicity’s debtor-in-possession financing proposal secured with some of its existing noteholders, up to a maximum amount of C$30m.
Mobilicity has not placed a deposit, which would have allowed it to compete in January’s auction of 700 MHz spectrum. However Catalyst Capital, which holds bonds in the operator, as well as its founder John Bitove are both on the list.
No foreign operators have placed deposits, in spite of the government’s attempts to attract investment from abroad to fuel the creation of a national fourth player.
US giant Verizon Communications showed the most interest and was reported to be in talks with Mobilicity, but later said it did not feel the Canadian market offered sufficient returns.