According to the Financial Post, Toronto-based Catalyst Capital Group, a shareholder of Mobilicity seems to be encouraged by the $700 million bid from Verizon for Wind Mobile, as it is looking to start talks with the US telecom carrier. The Catalyst Group has more than 30 percent senior secured credit in the struggling telecom startup.
“Catalyst Capital Group Inc. isn’t interested in buying Mobilicity, but the successful private equity firm is trying to parlay its senior debt position in the struggling wireless newcomer into a role with U.S. giant Verizon Communications Inc.’s plan to enter the Canadian market with an acquisition of rival Wind Mobile.
Sources told the Financial Post that Toronto-based Catalyst has been in discussions with Verizon Communications Inc. as the second-largest wireless provider in the U.S. prepares to enter the Canadian market. The discussions, described by an insider as “still in the introductory and early stages,” are in conjunction with Verizon’s talks with Wind Mobile’s owners to acquire the wireless startup for as much as $700-million. Catalyst is said to “be involved in the process for Wind,” although an outright bid by the private equity firm on its own is unlikely.”
People familiar with the situation have divulged that talks are still in the initial stages. However, this shows that Catalyst Group is now moving into a new direction in terms of its share in Mobilicity, as the manager partner and co-founder of Catalyst, Newton Glassman, has indicated that the is not much interested in the wireless startup alone because “Mobilicity on its own is a flea on an elephant’s butt of wireless telecom in Canada.”
It is because of this very reason Glassman has recently said that Catalyst Group is willing to make Ottawa’s plan of having four wireless players in every province successful. It is also said that Catalyst is one of the buyers for Wind Mobile.
“Even so, Mr. Glassman reiterated his firm’s support for the small carrier, which is currently carrying $508-million in debt. “We will not stand in the way of any transaction for Mobilicity so long as our legal rights are respected as written in the indenture,” he said. “Anybody trying to take property that belongs to us will have a vigorous fight on their hands.
That is the message Catalyst has likely brought to Verizon.”
Although, it is not clear at what stage talks stand currently, but by bidding for Wind Mobile, Verizon could be looking to enter in the Canadian wireless market in an inexpensive way. Currently Wind Mobile has a 600,000 user base, so if Verizon buys Mobilicity too, then Canadian could expect to see powerful entrance of the US carrier in the Canadian market with nearly million subscribers from day one.
However, the Financial Post believes that Verizon is aiming more higher than this, as 10 percent is not big enough to sate the US carrier because there is also a possibility that it could even bid for TELUS, one of the leading wireless carriers in Canada.
Source: iPhoneinCanada
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