Mobilicity Debtholder Vote Postponed Again

by Istvan Fekete on July 4, 2013

Mobilicity has decided to delay a debtholder vote on a plan to recapitalize its $500+ million in debt. This is the second time the struggling wireless startup has delayed the vote, reports the Ottawa Citizen.

Bondholders are fighting for position with Catalyst Capital Group, a Toronto-based private equity firm pursuing a separate court action to set aside $75 million in financing that was announced in February. The wireless startup, which has roughly 250,000 subscribers, is very close to becoming insolvent.

This is happening while the US-based Verizon Communications has reportedly taken a further step toward entering the Canadian market: it has bid for Wind Mobile.
The bondholder vote was scheduled for Wednesday, and according to the latest information, it has been postponed for a week.

“The board has rescheduled the vote on the recapitalization plan to allow it to consider additional potential alternatives for the company and its stakeholders, including customers, dealers and employees,” president and chief operating officer Stewart Lyons said in a statement that could suggest the fledgling wireless firm is in talks with a prospective buyer.

Lyons’ statement comes after the Financial Post reported that Catalyst Capital has opened talks with Verizon. While the discussion is in its early stages, this could be a lifeboat for the struggling wireless startup.

Catalyst Capital is the largest debtholder in Mobilicity, and as the company has already pointed out, it is open to any deal that fully honours its rights. The phrase “honour its rights” was the main keyword in each of the latest statements, although the firm neither bid on the company nor had any interest in acquiring it outright.

This was happening despite expressing belief that the Canadian wireless market is able to support an independent, strong, national fourth carrier, that will offer consumers real choice, while meeting the government’s priority to provide greater wireless coverage at better rates for consumers.

Now the “broker” — Catalyst — is waiting for a powerful new entrant to take over Mobilicity, which is a good ROI, despite saying that Mobilicity is a “flea on an elephant’s butt of wireless telecom in Canada” on its own. A Mobilicity–Wind merger would make sense, as it could be a great start for a powerful fourth carrier.

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Written by: Istvan Fekete. Follow by: RSS, Twitter, Facebook, or YouTube.

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