Mobilicity receives creditor protection as it awaits government approval for a potential sale

Mobilicity has announced the approval of protection against its creditors as it waits for Industry Canada to give the nod to a potential sale by an unnamed buyer.

The cash-strapped new entrant, whose acquisition by TELUS was denied earlier this summer, has been frantically seeking a buyer for its approximately 200,000 customers. According to a press release issued late today, the company has been approved for protection under the Companies’ Creditors Arrangement Act of Canada by the Ontario Superior Court of Justice.

Such a move will give Mobilicity extra time to further strategize its restructuring plans and pay its debts, which are rumoured to be in the vicinity of $500 million CDN. At the same time, the company says that it is in the final stages of a “going-concern transaction,” likely a sale of its network and assets, to an unnamed buyer. The sale is in front of Industry Canada, and “is in the best interests of its stakeholders and hopes to advance the transaction in the near term.”

At this point, nothing has changed for Mobilicity’s customers, who can still expect service in the short-term.

The company’s former CEO and current Executive Chairman, John Bitove, has committed to bidding in the upcoming 700Mhz spectrum auction, along with Mobilicity’s primary debt holder, Catalyst Capital. Catalyst has long been a rumoured buyer of Mobilicity.

Update: According sources over at the Globe and Mail, TELUS and Mobilicity are reportedly in talks once again to ‘rekindle a sale.’

Apparently ‘One scenario under consideration, according to sources, is to give Telus a “put” right to exercise a spectrum transfer at a later date. It is unclear whether Telus would be willing to maintain its previous $380-million price tag for Mobilicity’s spectrum.’ Of course, Mobilicity and Telus declined to comment on the rumour.