Catalyst calls for urgency in Mobilicity restructuring

Recent documents submitted in Mobilicity’s court-monitored bankruptcy process indicate private-equity company Catalyst Capital Group Inc. is anxious to see a new arrangement for the wireless carrier soon. A filing from Catalyst, a secured creditor in Mobilicity, cites Jan. 30 as a key date for having a restructuring plan finalized. That is the date to which Mobilicity's bankruptcy protection was recently extended, and is also the deadline for applications to bid in Industry Canada's AWS-3 spectrum auction, which is slated to be held in March. An affidavit from Catalyst chief operating officer James Riley, dated Nov. 26, said that "unless a restructuring plan for Mobilicity can be developed and approved before January 30, 2015, Mobilicity will lose the chance to participate in an auction for AWS-3 Spectrum." The filing said Catalyst is prepared to provide $300 million to help restructure Mobilicity in order to participate in that auction. It said that the "terms of the auction would be substantially more advantageous to Mobilicity" than wireless incumbents like BCE Inc., Rogers Communications Inc. and Telus Corp. Industry Minister James Moore announced the auction in July and said 60 per cent the spectrum would be reserved for "operating new entrants," like Mobilicity, in regions where they currently have service. "If Mobilicity does not participate in the auction, the AWS-3 Spectrum will be sold to other auction participants and that will almost certainly lead to a permanent erosion in Mobilicity's competiveness," Riley said in the affidavit. He said the interests of secured creditors, who are owed more than $200 million, would be "seriously prejudiced" in such a scenario. Days after Mobilicity first entered bankruptcy protection in September 2013, a court filing from Catalyst indicated it held more than $60 million in secured debt in the carrier. In its recent court filings, Catalyst asked the court to direct Mobilicity's appointed monitor, Ernst & Young Inc., to make "reasonable efforts to arrange" meetings in the coming 10 days between Catalyst, Mobilicity and a committee of debt holders. In reference to a recent affidavit from Mobilicity restructuring officer William Aziz, in which he refers to discussions with several different parties regarding Mobilicity's future structure, Riley said: "Catalyst has no idea what is being referred to because it has been left out of any consultation about these matters." Catalyst also asked that the monitor provide a report by Dec. 10 on "progress made towards developing a consensual restructuring plan for Mobilicity and whether it would be appropriate to renew the mediation process to achieve such a plan ... " The Ontario Superior Court of Justice rejected these requests last week as it approved the extension to Mobilicity's bankruptcy protection. Riley's affidavit said the projected opening bid in the AWS-3 auction for Mobilicity in the four regions where it currently operates would be $62 million, and it must prove its ability to fund such an amount by Jan. 30 to become a qualified bidder. The filing said Catalyst officials met with another secured creditor on Sept. 24 and presented a plan to provide $400 million in financing to restructure Mobilicity, with Catalyst supplying three-quarters of funding, to allow it to participate in the AWS-3 auction. Riley said despite making this proposal known to Mobilicity and Ernst & Young, "the only responses have been conceptual in nature." Mobilicity declined to comment on Catalyst's latest court filings. — With reporting by Derek Abma at dabma@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca

Catalyst calls for urgency in Mobilicity restructuring

News | December 1, 2014

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Catalyst calls for urgency in Mobilicity restructuring

News | December 1, 2014

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