Primus Canada wins creditor protection as it negotiates sale to Birch Communications
Primus Canada has received court protection from its creditors as it looks to sell itself off to Birch Communications following a series of quarterly revenue declines.
On Tuesday, the Ontario Superior Court in Toronto granted Primus protection under the Companies' Creditors Arrangement Act.
The service provider has also filed a petition to have the Canadian decision recognized in the United States, where it has a small-scale service operation.
Being sold to Birch Communications would begin the last chapter for Primus, which has struggled to turn a profit on next-generation broadband services as more of its customers abandon their traditional landline and long-distance voice services in favor of wireless services.
According to court documents obtained by The Globe and Mail, Primus's revenue fell to $113.7 million in 2015 from $160 million in 2012, with underlying residential sales -- which made up half of its 2015 revenue -- declining by an average of 9 percent per year.
Toronto-based Primus, a service provider that has touted itself as Canada's biggest "alternative" telco to BCE and Telus, has more than 200,000 remaining residential customers and 23,000 small and medium-sized business clients, while the group has around 27,000 residential customers in the U.S. and Puerto Rico.
"Primus, historically, had a strong revenue base of long-distance and traditional local line revenue. It's no surprise to anybody that there is structural change going on in the industry. … Everyone's using mobile," said Michael Nowlan, CEO of Primus, in an interview with The Globe and Mail. "The marketplace -- and I do believe the marketplace as a whole -- will have great interest in getting competitive access to fiber [Internet] services."
Birch signed an agreement on Monday to acquire Primus for an undisclosed price. Primus said it will now seek the court's approval of the arrangement over the next three to four weeks.
Although Birch and Primus will need to get regulatory approvals, Primus is owned by U.S. private equity firm York Capital Management, which acquired the service provider 2013 for $129 million.
The acquisition for Birch would be important as it would give the Atlanta-based CLEC a deeper foothold in the Canadian service provider market. It also fits in with Birch's tuck-in acquisition strategy to purchase assets that will increase its customer density and expand its IP network.
- The Globe and Mail has this article
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