Nov. 17, 2006 Jeffrey Prosser has approached the V.I. government about buying several of his companies, including the local phone company, Vitelco, which is by far his most profitable holding.
Prosser, who along with two of his upstream companies, declared bankruptcy in August, has failed to meet two deadlines because he could not put financing together to satisfy the settlement agreement made with two of his major creditors. (See "Prosser Misses Court Deadline, Plans ICC Sale to Non-U.S. Investor").
Sources say Prosser wants $650 million for the phone company, the cable television company and his other holdings. However, his media holdings — which include the Daily News and TV2, a cable television station that reports news and carries other local programming — are not part of the deal.
It is unknown but unlikely that V.I. Community Bank, which is not part of Prosser's Innovative Communications Corp. family, is included in the package.
Documents filed by Prosser, Emerging Communications and Innovative Communications Co. LLC with the bankruptcy court last month sought approval to use Vitelco (V.I. Telephone Co.) to finance a $470 million settlement.
U.S. Bankruptcy Judge Judith K. Fitzgerald last week denied an ICC motion to extend the deadline for settlement in the bankruptcy cases saying in a one-sentence order, "there is impossibility of performance." (See "Bankruptcy Court Denies Prosser Request to Keep Proposed Settlement Alive").
Meanwhile, since all of Vitelco's financial information has been kept under lock and key by the Public Services Commission, it is difficult to determine the exact value of the territory's only phone company.
However, a review of court documents along with the valuation made at the time of the phone company's last rate hike suggest the phone company has a net value of between $85 and $100 million.
In a reply to the lawsuit brought by a group of Vitelco's preferred stockholders, who want their $85 million back from Prosser and have filed suit to get it, one of Prosser's New York lawyers, Orrick, Herrington & Sutcliff had this to say in poo-pooing the argument that Prosser had allowed liens to be filed against Vitelco by the Pension Benefit Guaranty Corp.
"The combined amount of the liens imposed on Vitelco's assets is less than four percent of Vitelco's net worth."
Earlier in the same brief, filed in the Southern District of New York on Oct. 20, the liens had been noted as being for $1.5 million and for $1.7 million, or a total $3.2 million.
If that figure is less than 4 percent of Vitelco's net worth then perhaps a slightly larger number, say $3.3 million, equals the 4 percent. If that is the case, then Vitelco's net worth is about $82.5 million.
In another unrelated filing, Carol Rich, a V.I. lawyer for Prosser, said that Vitelco represented about 85 percent of the assets of ICC; putting these two admittedly unrelated statements together would set the ICC value at about $100 million.
In 2003, the last time the public had access to Vitelco's financial information during the company's last rate hike request, Vitelco had a net value of $104 million.
Gov. Charles W. Turnbull has asked Public Finance Authority Director Kent Bernier to cut short a trip to Hawaii — where he was scheduled to speak at the Secretary of Interior's Conference on Business Opportunities in the Islands — to come back to the territory to discuss the offer.
The PFA, which was until this spring headed by gubernatorial candidate Kenneth Mapp, is the financing arm of the government. It is an autonomous agency with the power to borrow money, issue bonds, and make loans to the government.
The V.I. government once owned the phone company, which it sold to ITT (International Telephone and Telegraph) in the 1960s.
Government House spokesman James O'Bryan Jr. said since he was "not in the meeting" with the governor and Prosser he could not provide details of the proposal.
Bernier is apparently traveling from Hawaii and could not be reached.
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