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Eliminated Burlington Telecom Bidders Back in as Partners

Tuesday, November 21, 2017   (0 Comments)
Posted by: Jeff Couture

Two eliminated Burlington Telecom bidders are officially back in the running to buy the city utility — as partners.

ZRF Partners founder Faisal Nisar and Schurz Communications CEO Todd Schurz submitted a joint proposal to the city Monday, offering $25 million for Burlington Telecom. The proposal also detailed a plan to grow Burlington Telecom and make Burlington a "hot bed for tech entrepreneurs and startups in New England."

The joint proposal came about through Gary Evans, an adviser to Nisar and the retired CEO of Hiawatha Broadband Communications, which Schurz bought last month. Evans connected Nisar and Schurz last week, Schurz said, and the two men spoke for "hours" about their vision.

Evans has served as a consultant for Burlington Telecom.

ZRF would be the managing partner, Schurz said, and has control of the bid. Schurz will be an investor.

The offer includes $1.75 million over the next seven years for a fund to support local startups in partnership with BTV Ignite, a nonprofit founded to support the local tech economy. The offer also includes a commitment to expand Burlington Telecom throughout the city and into neighboring communities, and $350,000 over the next seven years to teach technical skills to Burlington students.


"We plan to reinvest BT's entire profits back into growth-related initiatives," Nisar and Schurz wrote.

Both men were in Burlington on Monday to meet with city councilors and Burlington Telecom staff.

"I don’t think it’s what the city was necessarily expecting," Schurz said. "That’s why we’re here."

Nisar said both men have been part of the process for months and are familiar with Burlington Telecom but thought it was important to explain in person the rationale behind the partnership.

The joint offer came after the Burlington City Council deadlocked while trying to decide between two finalists, the co-op Keep Burlington Telecom Local and Canadian-based Ting, a subsidiary of Tucows Inc.

After two tied votes, the council directed Ting and the co-op to come up with a joint proposal. Co-op board member David Lansky said the groups were unable to reach agreement despite productive talks.

The co-op also submitted updates to its offer Monday, including increasing the price from $12 million to $18 million based on being able to raise $6 million. If the equity can't be raised, the co-op would offer notes or carried interest to each of the parties due to receive proceeds of the sale, but is willing to reduce the price back to $12 million if the parties are unwilling to accept.

The co-op submitted three sets of financial documents to detail various scenarios.

Ting's latest offer is the highest remaining bid. It is offering just over $32 million total and promising to make Burlington a regional hub for its business.

Schurz's original offer was eliminated in an early vote by the City Council. Only one councilor, Ward 4's Kurt Wright, voted for the Indiana-based company in October. The combined bid is lower than Schurz's original offer of $30.8 million.

Nisar of ZRF Partners withdrew his bid earlier this year after Mayor Miro Weinberger raised conflict-of-interest concerns. The mayor's actions sparked accusations from some city councilors that the mayor had breached the trust of the city council by acting unilaterally.

ZRF's original letter of intent has not been released. A Burlington Free Press records request for the offer was denied by Weinberger's administration, citing a nondisclosure agreement.

Weinberger's spokeswoman, Katie Vane, said the administration had been unable to get permission from Nisar to lift the nondisclosure agreement in order to release the previous letter of interest.

Nisar said Monday evening he was in discussions with the administration to release his earlier letter of intent. He declined to elaborate on the conflict of interest.

Earlier Monday, Nisar said he was willing to release his previous letter of intent but had not been asked by the city to lift the nondisclosure agreement. Later he said he misunderstood and negotiations about releasing the September letter were ongoing. The mayor's chief of staff said the administration has asked for the original bid's release several times.

"Our bid has nothing different," Nisar said, explaining that the bid put forward was extremely similar to the withdrawn bid.

Wright said the conflict of interest revolved around concerns that Dorman and Fawcett, the consultants who are managing the sale and who will be paid from proceeds of the sale, could invest profits into a ZRF-owned Burlington Telecom.

Weinberger has refrained from disclosing the nature of his concerns, citing the nondisclosure agreement. His administration heavily redacted a public records request from the Burlington Free Press for communications related to the conflict of interest that led Nisar to originally withdraw.

A second conflict of interest cropped up in early November, when Councilor Karen Paul suddenly recused herself before the council was scheduled to make a final decision. When the council delayed the vote, she quit her job and voted the following week.

The administration also has heavily redacted documents relating to that conflict of interest.

The council is scheduled to vote on a final buyer next Monday. The meeting is scheduled to begin at 5:30 p.m., 90 minutes earlier than usual, according to the city council president.

Source: Burlington Free Press


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