Mobilicity to Seek Creditor Protection Extension – Again

by Istvan Fekete on June 25, 2014

Without any viable bids on the table, struggling wireless carrier Mobilicity is asking the courts for more time to find a way out of its financial distress. You may recall that Mobilicity entered creditor protection last September. After nearly nine months under the court’s protection, the carrier is asking for more time to evaluate its options.

Mobilicity, which has been under creditor protection since September, filed materials this week asking the Ontario Superior Court of Justice for a further extension of the “stay” period shielding it from legal action to Sept. 26 from June 30, reports the Globe and Mail.

The wireless startup had first agreed to be acquired by Telus for $380 million in May, 2013, but the federal government rejected the deal, saying it was against the rules to transfer set-aside spectrum to one of the biggest wireless players in Canada.

Since then, Telus and Mobilicity have tried a second and third time to ink a deal, but even after the five-year moratorium expired, the government rejected the idea of a spectrum transfer to an incumbent’s carrier, as it doesn’t want to repeat the same mistakes it made 20 years ago.

Since then, Mobilicity has been struggling to find a buyer for its most valuable asset, the licenses for the spectrum it used to build cellular networks. To acquire the licenses the carrier spent $243.1 million back in 2008 at a spectrum auction.

Earlier this year, the court ordered Industry Canada to participate as a mediator after Telus placed a third bid on Mobilicity. For certain reasons, however, Telus walked away shortly after the bid went public.

The Globe and Mail’s sources revealed that Industry Canada had put Telus under pressure after renewing the bid.

It is worth noting here that, earlier in January, voices started whispering about a possible Quebecor–Mobilicity merger. The rumours are now attracting more attention, as the local wireless player has obtained licenses in key geographic areas of the country, outside its “playground”, and more recently went public with expansion plans.

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

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