Mobilicity looks for credit protection as it awaits news over an anonymous takeover bid

by Andrew Roach on October 1, 2013

Many of the new wireless carriers from the previous spectrum auction have struggled to keep themselves afloat over the past couple of years and have slowly faded from being national players to regional network providers.

Mobilicity has experienced some of the worst trouble with mounting debts driving the company to the point of extinction deterring bigger firms from making an offer for the struggling carrier.

But the struggling Toronto carrier could be one step closer to finding a much sought after buyer with the carrier filing for formal credit protection while they await a federal review of a takeover from an undisclosed firm.

There has been strong interest from larger telecom firms to buy the network as both Telus and WIND Mobile have spoken about a possible deal in the last few months.

As the bid involving Mobilicity continues to be processed privately by Industry Canada, the protection order will allow the company to operate normally and not worry about having to pay out any creditors during the handover period.

Having amassed debts that are thought to total around $465m, Mobilicity has been caught in a long legal battle with their primary creditors Catalyst Capital for much of the year.

For the moment, all the legal action between the two parties has been frozen allowing for any deal involving the deal to go ahead while Catalyst have their financial rights also legally protected.

With the protection order in place, the speculation has already started as to who the anonymous bidder for Mobilicity might be.

The company has certainly been an attractive proposition for several larger companies and Telus had been set to complete a deal in June before Industry Canada rejected the bid over concerns surrounding the transfer of unused wireless spectrum.

On top of that, talks with both WIND Mobile and Verizon over possible deals broke down as neither side could agree on a deal that would satisfy either party.

However, Mobilicity executives are confident that this deal will go through knowing that it meets of all the necessary conditions set out by Industry Canada and will help the company prepare for the future. This was outlined by Mobilicity COO Stewart Lyons who told the press: “If the transaction is approved, it will mean a seamless transition
for our customers and hopefully our employees and various other stakeholders in the company.”

Until the bidder is revealed, Mobilicity’s future plans are still very unclear but knowing that a deal is on the horizon will give anyone involved with the firm piece of mind that something will happen and that they won’t just fade away into oblivion.

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Written by: Andrew Roach www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Facebook, or YouTube

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