The Federal Communications Commission has approved the sale of Vitelco and its related firms to the National Rural Utilities Cooperative Finance Corporation (CFC), the specialized bank for rural utilities that originally lent former ICC owner Jeffrey Prosser and his corporations more than half a billion dollars. This is just one of several such governmental clearances before the transfer of the phone company, once owned by the now bankrupt Prosser, can be finalized.
Buying a used phone company is more complicated than buying a used car. In the latter transaction the new owner and the old owner agree on a price, trade cash for the keys and a signed-over title, and then file the title with the motor vehicle agency.
In the case of this phone company, U.S. Bankruptcy Judge Judith Fitzgerald has given a tentative approval of the purchase, as have the authorities in the British Virgin Islands for the once-Prosser-owned facilities there.
Similar approvals must be secured from the Dutch island government for the transfer of cable properties on St. Maarten, and from the V.I. Public Service Commission before it goes back, one last time, to Judge Fitzgerald, for final approval.
When it became clear that no one else wanted to pay enough for the firm to meet the standards set by Stan Springel, the court-appointed trustee, Springel then proposed to the bankruptcy court that CFC’s offer for a credit purchase be approved. In a credit purchase, the creditor uses some of the dollars owed to buy a property controlled by the trustee.
There were two objections filed with the FCC, one by Atlantic TeleNetwork, Inc., a major telecommunications firm on the mainland with wireless data provider services in the Virgin Islands; the other was filed by Jeffrey B.C. Moorhead, as an individual.
Moorhead had appeared previously in the case as a PSC hearing examiner until he was forced out by the V.I. Attorney General; an attorney himself, Moorhead has also represented Dawn Prosser, Prosser’s spouse, in some bankruptcy matters.
Most of the 15-page decision, released on Dec. 7 and signed by the chiefs of the four FCC bureaus involved in the transaction, dealt with a point-by-point reply to ATN’s objections.
One of ATN’s principal points was that if the FCC approved the sale it would continue what it regarded as the anti-competitive linking of Vitelco and the islands’ cable companies. The FCC said that that linkage was not created by the sale, and that they were unwilling to look at arrangements other than those directly associated with the sale. "This common control has existed since 1998 and does not arise as a result of the proposed transaction," the decision said.
The four FCC chiefs went on to say that – given the difficult situation faced by both V.I. firms – it was important that Innovative and Vitelco should be able continue to share some costs.
ATN had argued that CFC was not qualified to run the local phone company because of its past record as a lender to Prosser’s corporations. On this seldom-mentioned, "elephant in the room" matter of CFC’s history in making a half billion dollar investment in the Virgin Islands that turned sour, the four chiefs (perhaps thinking of much bigger financial mistakes by much bigger American institutions), had this to say:
"We agree with Applicants that there is no evidence that CFC should be disqualified as a purchaser on the basis that, as ATN alleges, CFC failed to monitor and detect mismanagement and malfeasance by the former owner after having loaned $500 million to ICC. While the Applicants have acknowledged the mismanagement and malfeasance of ICC’s former owner, [who is never mentioned by name in this document] there is no evidence that any misconduct is attributable to CFC, or that is was negligent with respect to any oversight responsibilities it may have had as a creditor in these circumstances."
That the Delaware Courts (and the Source) had for years described many of the financial adventures of Prosser and his companies before CFC acted on them is not mentioned in the text.
While the FCC carefully examined ATN’s brief, it had little to say about Moorhead’s petition. It was mentioned in a footnote, saying he felt that the "proposed transaction will adversely impact competition and disaster planning and recovery in the U.S. Virgin Islands" but never mentioned again in the text of the document until it was formally denied in one of the concluding Ordering Clauses of the statement.
