Mobilicity wins creditor protection, seeks buyout OK

Tue Oct 1, 2013 8:57am EDT
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By Alastair Sharp

TORONTO (Reuters) - Wireless telecom company Mobilicity, one of the smallest players in the Canadian market, said it won creditor protection from an Ontario court on Monday as it seeks regulatory approval for a transaction that would allow it to keep operating.

Mobilicity said the tentative transaction is currently being reviewed by the federal government, but declined to identify the possible buyer. It said in July it was talking to several interested parties.

A source told Reuters in June that Verizon Communications Inc was in talks with Mobilicity, although Verizon has since said it is not interested in the Canadian telecoms market.

Major operator Telus Corp had a bid for the company blocked earlier that month by the federal government, which is eager to see four wireless competitors in each region, but one analyst suggested after the announcement that Telus could make a fresh offer. Telus declined to comment.

Mobilicity said its customers would not notice any change in wireless service while it is in protection and that its dealer network remains open for business.

"This step was taken today to give us the time to create stability in the company, to stop the clock as it were, and allow the company to restructure its affairs as this review takes place," Stewart Lyons, Mobilicity's chief operating officer, told Reuters in a phone interview.

Mobilicity was one of several new entrants to Canada's wireless industry that bought spectrum in a 2008 auction. They have since helped to lower average wireless bills but struggled to dent the dominance of three major carriers: BCE Inc's Bell, Rogers Communications Inc and Telus.

Mobilicity did not apply to take part in another auction of valuable airwaves due to start in January. Its biggest debt holder, private equity firm Catalyst Capital Group Inc, and its founder and executive chairman, John Bitove, have applied separately.   Continued...