WCAX.COM Local Vermont News, Weather and Sports-Burlington Telecom Wins New Financing

Burlington Telecom Wins New Financing

Burlington, Vermont - November 13, 2009

Mayor Bob Kiss, P-Burlington, and the City's Chief Administrator Jonathan Leopold called in the press to announce that the city-owned cable company-- Burlington Telecom-- has secured a $55 million finance restructuring agreement with a Midwestern company.

"Which will enable BT to meet its current financing obligation to the CitiCapital as well as its obligation to the city's pooled cash account," Kiss said. "In addition BT has done an analysis of cash flow projections and can expect to repay any future debits from the pooled cash account with 60 days."

The announcement was made with many of the city councilors in the room who claimed the mayor and the city's chief financial officer kept them in the dark about a $17 million loan from the city's cash pool and failure to repay it within 60 days as required by law.

Leopold explained that the finance package is designed so BT can pay for its debt service without violating state regulations again and at the same time provides for future growth to become successful.

"In addition the proposed deferral of debt service will provide Burlington Telecom sufficient internal cash flow to proceed with the capital expenditures for hooking up new customers," Leopold said. "It will also provide Burlington Telecom a period of time to build sufficient cash reserves to ensure that BT will be cash flow positive and able to fully meet its operational obligations."

Now the proposed restructured finance package will be the subject of a finance committee meeting Friday evening. City councilors indicated they will have many questions but the mayor says he expects to recommend acceptance of the proposal at the regular city council on Monday.

City leaders are confident they can eventually build Burlington Telecom's customer base to a point where they are breaking even. What this refinancing does is give the company more time to build that base.

Burlington Telecom plans to finish its build-out within city limits. But also hopes to build similar systems in other communities.

Brian Joyce - WCAX News