The Burlington City Council discussed Burlington Telecom financing in an executive session Monday evening.
After a lengthy discussion Monday evening, the Burlington City Council stands poised to make a major decision about how to finance $6 million of the city’s $10.5 million settlement with Citibank over the troubled Burlington Telecom.
Mayor Miro Weinberger described this decision as the next big step in the settlement agreement announced in early February. Citibank financed the infrastructure for the city-owned utility, and it went to court two years ago to recoup its debt, demanding that the city pay $33.5 million for the cost of the network.
Two financial institutions — their names have not been disclosed — have offered to furnish the $6 million bridge loan the city needs to secure to move the settlement forward, Weinberger said. City council members held a special meeting Monday night and they spent most of it — about two hours — discussing the two candidates in an executive session.
“That conversation was not fully conclusive,” Weinberger reported at the end to members of the public. “There were some questions that have come up that require additional work on the part of the administration and our consultants before the questions can be fully answered.”
The council is convening a second special meeting on Wednesday, and members expect to make a decision then. As part of the settlement, the city is supposed to file this information by Friday for review by the Vermont Public Service Board.
Anticipation for Monday's meeting ran high after a WCAX report, which referenced “multiple sources” who had told the news station that a local entity was interested in purchasing Burlington Telecom. According to WCAX, Mike Tuttle, president and CEO of Merchants Bank, said the bank will be helping the group finance its offer.
But Councilors Joan Shannon and Karen Paul both said, contrary to the report, no buyer had come forward. If the utility is sold — and Weinberger has said he wants to find a buyer within four years — Citibank will receive a portion of the sale proceeds.
The bridge loan is expected to have a three-year lifespan, Weinberger said, but other terms — the interest rate, for instance — depend on which proposal the council chooses.
In addition to the bridge loan, the McNeil, Leddy & Sheahan law firm, which was a co-defendant in the lawsuit, is expected to supply a $1.5 million payment; the city’s insurance carrier will pay $500,000; and the city will supply $1.3 million using anticipated BT profits. Nearly $1 million of the utility’s profits that had been set aside for repayment to Citibank will also count towards the $10.5 million.