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Layoffs at Burlington Telecom


Published February 8, 2011 at 8:27 p.m.

Six people were effectively laid off today at Burlington Telecom, less than two weeks after city officials proclaimed that the muncipal utility was paying all of its bills and netting a positive cash flow — absent paying off the debt it owes to taxpayers.

The six positions are slated for elimination as part of a staff restructuring being overseen by outside consultants. The positions include two technicians, two customer service representatives, an outside plant manager and BT's marketing coordinator. The six people who hold those posts were placed on administrative leave today; the City Council will have to approve the changes. Once approved, the six people will be officially laid off, said consultant Gary Evans of Hiawatha Broadband.

At a special City Council meeting two week ago, Evans said the main problem facing BT was too few subscribers. So, why axe the marketing position?

"This doesn't mean that BT's marketing efforts will stop," Evans said.

After the layoffs, BT will have a workforce of 20 employees. "We don't think there'll be a need for additional layoffs," said Evans. "This action does, in no way, suggest the beginning of the end or that this is the end of BT. On the contrary, we feel as if this will put BT at the right staffing level for its customer base."

Two weeks ago, outside consultant Steven Barraclough, who is helping to run BT's day-to-day operations, told attendees at a special City Council meeting that BT has a "surplus" of roughly $40,000-$50,000 per month and is not taking any money from the cash pool. In addition, BT is paying the interest on the $16.9 million owed to the cash pool.

Burlington Telecom is in the midst of discussions with several financial and strategic partners in an attempt to stay in business. The city is awaiting word from CitiCapital about what equipment it wants returned, and how. The city backed out of its $33 million lease purchase agreement with CitiCapital last year after it could not reach an agreement to restructure its debt.

When asked, however, to produce a standalone termination letter, the city said no such document exists.

"There isn't a stand-alone termination letter," wrote City Attorney Ken Schatz in an email to Seven Days. "Letters between the City and CitiCapital involve ongoing contract negotiations and settlement discussions. Therefore, in order to protect the City's interests, we need to keep them confidential."

Barraclaugh said at the January meeting that BT has priced replacement equipment it suspects it will need when CitiCapital seeks return of the equipment it now owns as a result of the lease termination. Barraclough said the replacement equipment will cost about $6 to $8 million.

BT is developing a plan to take out existing equipment and install new equipment that is designed to provide "minimal disruption in service," Barraclough said in January.