El Nuevo Día
Thursday, March 8, 2007
Page 56 - Business Section
COURT AUTHORIZES THE SALE OF MOVISTAR
New Third Generation Network will be ready by summer
The Bankruptcy Court approved yesterday the sale of telecommunications provider MoviStar for $160M to PR Wireless- a partnership formed by investments groups MC Venture Partners and Columbia Capital.
The transaction is the result of the reorganization plan that NewComm Wireless Services, former operator for MoviStar, began in November when it filed its reorganization plan under Chapter 11 of the Bankruptcy Act.
At that moment, management had received a temporary loan of $38M from MC Venture Partners and Columbia Capital, and at the same time contracted Nortel to develop a new network.
The court approval announced yesterday will allow, among other things, for MoviStar to continue developing the network. Work already started in January and should be ready by summer. As a result, MoviStar customers will have access to a network that will duplicate actual coverage and which will allow data transmission at a high speed.
In an interview with El Nuevo Día, Javier Lamoso, MoviStar president, explained that as part of this transaction, management and employees of the provider remain the same. Lamoso will continue as president, although he did not specify which requirements the investment group had made in terms of their participation in the Board of Directors or in the management structure.
"The operation has not been affected or any employee dismissed", Lamoso indicated in a telephone interview. "We now have a clean slate financial wise and with the shareholders. We had a structure problem with the previous group which was Telefónica (Spain). But the Court approved the sale and with that all our creditors get paid", Lamoso explained.
"When we filed for the reorganization, we had operational and refinancing plans ready", MoviStar president added when he explained the expediency of the court in approving the plan presented in November.
Lamoso indicated that Judge Enrique Lamoutte authorized yesterday the sale of the MoviStar assets to PR Wireless.
When asked about the general condition of the wireless industry, Lamoso indicated that the establishing of the IVU (New Sales Tax) has impacted the industry significantly. "We are talking about an additional 7% that was not there before and that is holding back the growth of the industry".
On the other hand, he mentioned that it is still very healthy that there are six telecommunications providers in Puerto Rico, which keeps them being aggressive in their offers and services to the market.
Columbia Capital is a capital investment firm with more than $2,000M in funds dedicated to the telecommunications field. MC Venture Partners has recently led investments of over $200M in mobile communication giving support to such group as Metro PCS (Miami, Dallas, San Francisco), Mobi PCS (Hawaii), and Revol (Cleveland).