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Interim ICC Chief Expects New Owners in 2008


Feb. 1, 2008 — E. Clarke Garnett, Innovative Communications (ICC) interim president and chief executive officer, said Thursday Vitelco telephone and the other Innovative Communications companies should be sold and under new ownership by early November. Garnett was speaking at a Rotary Club of St. Croix luncheon at Gertrude's Restaurant.
The sale is part of ongoing Chapter 11 bankruptcy reorganization of ICC assets. Garnett was appointed to run the company by the board of directors in December, replacing former president David Sharp.
Garnett emphasized that Vitelco and the other companies are financially sound and not in bankruptcy.
"Vitelco is not in bankruptcy," he said. "The holding company that owns Vitelco is. But as that proceeds, Vitelco is in the process of being sold."
There are a large number of interested bidders, he said.
"But as someone once said, interest is free," he said. "We anticipate a calendar where sometime in March we see an indication of interest from the most realistic bidders. We might have hundreds of bidders but as few as 12 to 15 realistic buyers after narrowing down to determine who is most likely to finish the sale." Once a pool of serious buyers is formed, they will come to the island to see the company and its operations firsthand.
"They will be kicking the tires, so to speak, seeing the reality of what they are buying," he said. "The final bidding actually will be an auction process, not quite like Christie's, where the bidders are all in a room together, but a competitive process."
The sale itself should be sometime in mid-May. Then the regulatory process would begin, as the Federal Communications Commission, other federal agencies and the regulatory bodies in the territory weigh in.
"That can take 100 to 120 days, so in reality, at the end of the process, there will probably be a new owner at the beginning of November or end of October," he said.
Garnett said he expects to shepherd the company through reorganization and sale, then move on. Living on St. Thomas for the time being, his home and family are in Richmond, Va.
Garnett has worked in the telecom industry in a number of capacities since 1983. After running Kansas Cellular for a number of years, he helped sell the company to Alltell in 1999 and opened his own telecommunications consulting firm: ECG Enterprises.
Reorganization used to be rare, he said, but the industry has changed tremendously over the past decades.
Garnett portrayed Innovative as a mixed bag of challenges and opportunities as he described what he sees as the state of the company.
"The company is solid and will continue to provide services and is in a very stable financial situation," he said.
In some areas, the company is on top of, or even ahead of the curve.
"Innovative has a consolidated service. Not many telecommunications companies offer telephone, cable television, internet and wireless on the same bill," he said.
On the other hand, some aspects of the company's infrastructure could be improved.
"As you know, our wireless is not the most advanced," he said. "That will improve. Probably the most valuable pieces of the company right now are the wireless and cable businesses."
Garnett praised the company's staff.
"I've been excited to see the people," he said. "I can tell you, through all the tribulations the people of this company have been through, the dedication they have is second to none. And now we are providing them the tools to get their jobs done, you can feel the excitement. Bidders will see there is a lot of potential at this company."
A member of the Rotary Club audience asked if the person or company that buys Innovative is free to break it apart and sell its components. Garnett said the same regulatory agencies and laws affecting Innovative now will affect any buyer, so the buyer would not be free to do entirely as it wishes.
"You don’t have free rein, you have the existing regulation affecting Innovative today," he said.
Asked what kind of shape the company's infrastructure, its cables, routers and service machinery are in, Garnett gave a qualified answer.
"The physical plant is in reasonable shape," he said. "I would not say it is the shape we would like to see. We don’t have the capital to do what we would like at this time and have to prioritize. The first thing was to stabilize the cash flow situation within the company and we've done that."
Some customers have complained there are not enough cable receiver boxes, forcing some new customers to wait weeks for service. Garnett declared this is improving.
"It is a complicated situation as we prepare to move from our current platform to an all-digital platform," he said. "We have purchased some and are distributing them, and more have been ordered. The situation now, compared to two months ago, is much better. We don’t have the quantity we need yet, but we will."
Virgin Islands Community Bank cashed a number of checks from some ICC companies when Jeffrey Prosser owned both the bank and ICC. The funds to cover those checks were not in the accounts on which the checks were made. Asked the status of those debts, Garnett said with cash flow stabilized and repayment contracts in place, those debts would be taken care of as a matter of course.
Innovative has fallen short on payments into the company pension plans, leading the federal Pension Benefit Guaranty Corporation to file millions of dollars in liens against the company, demanding payment to the funds. Garnett said he understood the pension plans would be made whole as part of the sale process.
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