US rural wireless provider Open Range is set for liquidation after its sole bidder withdrew a US$2m offer to acquire its assets out of Chapter 11 bankruptcy protection.
Local broadband provider TotheHome emerged as the group’s “stalking horse”…
US rural wireless provider Open Range is set for liquidation after its sole bidder withdrew a US$2m offer to acquire its assets out of Chapter 11 bankruptcy protection.
Local broadband provider TotheHome emerged as the group’s “stalking horse” bidder on 27 October, and filed an asset purchase agreement to the US bankruptcy court of Wilmington, Delaware, on 2 November.
However, a court filing on 15 November reveals: “The buyer has advised the debtor that they will not be proceeding with the purchase of substantially all of the debtor’s assets in accordance with the asset purchase agreement, dated November 2, 2011.”
Open Range and TotheHome did not return requests for comment before the press deadline.
Local reports citing TotheHome president Shawn Sprengler suggest the potential buyer pulled out because it received information from Open Range on 11 November that it did not expect.
The company 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.
Chris Edwards, CFO of Open Range, said at the time that, if no buyers were found for either the entire business or select assets over the next month, it will immediately shut down its network and wind down business operations through liquidation.
According to Open Range, it has US$114m in assets and total liabilities of US$110m. It posted an operating loss of US$50.4m last year on sales of US$1.7m.
Last year, the group 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 it eventually found this partner in satellite/terrestrial venture LightSquared, however, the GPS interference dispute that this company continues to face has mounted even more pressure on Open Range.
Its liquidation is likely to draw further criticisms from some politicians in the US, who have questioned whether government funding was awarded to the company in the public interest.
The US Energy and Commerce Committee has recently launched an investigation into a five-year US$267m government loan, which was issued to Open Range back in 2008 by the Department of Agriculture’s Rural Utilities Service (RUS).
The government committee is seeking assurances that taxpayer funds were used appropriately in granting the loan, which was later reduced to US$180m but has US$73.5m left outstanding.
In a bipartisan letter sent to the RUS on 9 November, it called for documents relating to Open Range’s loan application, approval, and any subsequent developments.
