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Council Selects Schurz, ZRF to Buy Burlington Telecom

Wednesday, November 29, 2017   (0 Comments)
Posted by: Jeff Couture

The Burlington City Council voted 8-2 early Tuesday to select Schurz Communications and ZRF Partners' bid to buy Burlington Telecom — picking an option that was not on the table at the start of a lengthy and at times testy meeting.

The winning bidders negotiated their last-minute offer in a hallway in city hall. Around 11 p.m. Monday, they put forward a Schurz bid of $30.8 million — the company's original offer before it was eliminated as a finalist on October 16.

Eight councilors voted in favor of the Schurz-ZRF proposal. Max Tracy (P-Ward 2) and Ali Dieng (D/P-Ward 7) voted for the co-op Keep BT Local. Councilors Richard Deane (D-East District) and Joan Shannon (D-South District) declined to support either of those bids after their choice, Toronto-based Tucows, was eliminated.

"I have never seen a less transparent offer than bringing in a completely new offer when everybody's asleep," Shannon said, as the session continued past midnight.

Kurt Wright (R-Ward 4) called the final outcome "the best of both worlds" from ZRF and Schurz.

The council spurned a $32.3 million offer by the Tucows and a bid from KBTL, which offered $12 million to $18 million.

The meeting dragged on more than eight hours, until 1:45 a.m. Tuesday. After an information session and public forum, the council took recesses that lasted nearly two and a half hours. Councilors and bidders gathered in groups to strategize and discuss the process.

When the councilors reconvened, they made a final decision with no public input on the winning bid. "I'm okay with giving up transparency for a better offer," said Dave Hartnett (D-North District) with a shrug during one recess.

Under their new proposal, ZRF Partners, led by Faisal Nisar, would be a minority owner. The bid details are unclear. Nisar said it was not yet decided what percent ownership he would have in the company, though it would be a minority stake. Nisar would be responsible for delivering the community benefits offered in the bid — including funds for tech start-ups and job training.

Schurz CEO Todd Schurz said he was not sure who would manage BT day to day. Schurz said that under the bid, his company would pay cash to the city, retain existing BT staff, and allow 20 percent — or potentially higher — city equity. Schurz will not increase broadband costs for five years.

"The last [deal] we didn't have all sorted out because it took us four days. This one was 15 minutes." Schurz told the council when he stumbled over questions.

Some councilors pushed back on the lack of transparency. "I feel incredibly uncomfortable with this," said Tracy, calling it "unfair" to other bidders and the public. "I think this is a slap in the face to the public process that's happened here," he added, to applause from the KBTL supporters in the crowd.

Shannon questioned Schurz's commitment to net neutrality, and ZRF's refusal to divulge the investors funding the purchase. The meeting grew testy when she raised questions about councilors who met individually or in small groups with Nisar and Schurz.

"You're out of control, Councilor Shannon!" Hartnett yelled, pointing her finger at her.

The vote ends a six-month process filled with controversy, reversals and delays. Eight bidders submitted offers in early June. The council narrowed the field to four before ZRF Partners dropped out, citing a conflict of interest in September; Schurz was eliminated in a council vote on October 16.

The council couldn't decide between the original finalists — Tucows and Keep BT Local — and so, after two tie votes, the councilors invited the two eliminated bidders back into the process. ZRF and Schurz decided to team up soon afterward.

Source: Seven Days.


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