Several reports have earlier suggested that Mobilicity is looking for a buyer and now it seems that it has taken another step in this direction, as on Friday, April 26th, the wireless company has made it known that an Ontario court has allowed it to launch its “restructuring process.” This indicates that Mobilicity is getting ready for a possible sale, as the court orders have allowed the telecom carrier to request its debt holders to take part in a ballot on a sale plan and recapitalization plan, “both mutually exclusive but being pursued in parallel to fit an expedited timeline,” according to iPhoneinCanada. The balloting will be carried out on May 21st. The Globe and Mail has shed the light on Mobilicity’s plan in its recent report. Here are some extracts from the piece:
“The first is an “acquisition plan” that “provides a structure for an as yet to be determined purchaser to acquire all of the outstanding shares of Mobilicity.” The money from any potential sale would be used to repay all of the company’s outstanding first and second lien debt and its outstanding unsecured debt securities.
The second plan is an alternative arrangement – a “recapitalization” proposal that would be triggered if a sale of the company cannot be completed. Under such a scenario, a recapitalization would reorganize company’s “share capital,” facilitate the repayment of certain second lien notes and provide the carrier with badly-needed cash so it can continue to provide service to its customers.”
If the sale of Mobilicity gets approved then, it can seriously put the Federal government’s wireless competition plans in trouble because two other small wireless companies, WIND Mobile and Public Mobile, are also looking for buyers. The reason behind wrapping up their businesses from Canada is that the three big carriers Bell, Rogers and TELUS have formed a supposed cartel in the region because of which all three Wind Mobile, Public Mobile and Mobilicty were not able to penetrate deep into the Canadian market in spite of several efforts.
As a result of that the three telecom companies initially withdrew themselves from CWTA, as they believe that telecom authority is favouring the big three on a wide range of issues because of which it is tough for them to carry on their business in the country. So finally Mobilicity filed the request with the Ontario court to grant the company permission to ask for balloting and judge has approved its request.
Source: iPhoneinCanada
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