At nearly 2 a.m. Tuesday, the Burlington City Council selected a buyer for Burlington Telecom whose bid was reorganized only hours before it was voted on. In an eight to two vote, the council chose Schurz Communications, an Indiana based-company to take over the city’s telecom company.
The bid from Schurz also included the company ZRF as a minority partner. Both groups had been in the final four bids advanced to the council but they were eliminated and only recently brought back into the running.
The two other bids – from Toronto-based Ting and the cooperative Keep BT Local – had been the only finalists until the council decided to open the process up when they deadlocked on a vote to pick between the first two finalists.
The selection of the Schurz bid came as a surprise – especially since the bid that the council considered at the start of the meeting wasn’t the same bid that they ultimately voted on.
At the start of the night, ZRF was offering $25 million, with $10 million coming from Schurz, who would be a minority partner. But after councilors raised concerns, ZRF and Schurz renegotiated their proposal in the halls of Contois Auditorium and presented a new proposal to the council.
The new deal basically flipped the old deal – Schurz would be the majority partner and operate and ZRF be a minority partner in the deal.
While Todd Schurz, CEO and President of Schurz, admitted that since the new deal had been worked out in about 15 minutes, there are still some details to nail down. But essentially, he said his company would make the same offer they had originally made to buy Burlington Telecom.
“What we’re proposing is taking elements out of Schurz’s last LOI [Letter of Intent] and melding them with the LOI that you received from us Monday of last week and the updated one today," Schurz said. “So it would be the old Schurz price of $30.8 million… and all the elements of the ZRF bid.”
City Council President Knodell said the new bid from Schurz and ZRF bid had positive implications and would mean BT would stay independent and “Burlington-centric.”
“With the KBTL and Tucows/Ting bid…we had… in many ways, two very opposite proposals and we were getting deadlocked between those two opposites and I was saying we needed to find something in the middle,” Knodell said. “And that eventually led to us inviting back Schurz and ZRF.”
But Councilor Max Tracy said that he was uncomfortable with how the bid had been negotiated.
“We came into this meeting thinking we were going to be debating one LOI and midstream, out of the view of the public, we got a completely different LOI that was negotiate out there in the hall,” Tracy said. “I think it’s incredibly unfair to the citizen of Burlington who have not had a chance to look at this LOI…it’s just a slap in the face to the public process that’s happened here.”
Councilor Dave Harnett said that since the LOI is the one the Schurz already submitted, the information has already been seen by the council and the public.
“This isn’t something that’s brand, brand new,” he said.
Schurz and ZRF plan to release a final LOI with the updated terms of the bid this week.
