Mobilicity turns to Plan B as recapitalization plan vote scheduled for July 3rd

The lights are still on at Mobilicity, for now, but the carrier has turned to an inevitable Plan B, a recapitalization plan that will decide the fate of Canada’s struggling new entrant network provider.

Back in April, Mobilicity said that it would seek a buyer in wake of financial problems, barring such an outcome, approval for restructuring via a recapitalization plan would be sought through the courts. That approval was given, and parallel paths were undertaken. When TELUS announced that it would be purchasing Mobilicity along with its AWS spectrum, extensive debt and 250,000 customers, it was assumed the worst was over and consolidation in the Canadian telecom space was beginning.

Of course, we know the outcome. The CRTC denied TELUS’ acquisition of Mobilicity by stating that a transfer of spectrum licenses would not be possible until early next year, leaving the deal to die. Now, Mobilicity must find a way to overcome its biggest obstacle, an alleged $450 million in outstanding debt with few repayment solutions.

Catalyst Capital Group, a fund company focused on rescuing cash-strapped organizations, controls roughly a quarter of Mobilicity through its debt spread and plans to have “an active role in the restructuring,” according to a statement issued by the company in April.

The vote by debtholders on the restructuring plan was supposed to go ahead on June 25th, but has been pushed back a week to “allow stakeholders the opportunity to review Industry Canadaguidelines (sic), regarding the transfer of wireless spectrum, prior to the vote. The guidelines are anticipated to be provided by the end of June,” said a press release issued today.

Via: Newswire