Tiverton ratepayers raise concerns over Bruce Telecom sale disclosure

Section: 
News

By Barb McKay

 

Details about the sale of Bruce Telecom are still vague, according to members of the Tiverton and District Ratepayers Association (TDRA).

 

Dozens of Tiverton and area residents showed up to last Wednesday’s Kincardine council meeting demanding answers to a series of questions about the recent agreement to sell the municipally-owned utility to Eastlink. The Canadian-based telecommunications company has agreed to purchase Bruce Telecom for approximately $24 million. Any remaining profits (currently $2.5 million) will stay with the municipality. The deal has to be approved by Industry Canada before it is finalized.

 

Bob Wilson, president of the TDRA, questioned the purchase price versus the value of Bruce Telecom, as well as the process through which the agreement was reached. He said an audited statement for 2012 put the book value of Bruce Telecom at $33,273,000.

 

“The Tiverton and District Ratepayers Association has grave concerns with this council in the way in which the sale was conducted and the lack of transparency on this issue,” he said.

 

The TDRA submitted a list of 18 questions to be answered during the meeting. Mayor Larry Kraemer told the group he had prepared answers. He said the municipality considered several options to deal with Bruce Telecom, which included cutting staff by as much as 25 per cent; increase service rates, which would have created advantages for competition; enter into a new regulated monopoly, such as natural gas distribution; stop investing in the company and ride it into the ground; or sell it.

 

Kraemer said a number of factors, particularly increased competition in the local market, have led to revenue losses.

 

“As its profitability drops, so does its value,” he said.

 

He said the sale price for the company is fair, based on earnings before interest, depreciation and amortization (EBIDA).

 

Wilson asked how much money Bruce Telecom has contributed to the municipality over the past 10 years through dividends. Kraemer responded the information could be obtained from the municipal treasurer.

 

“You’ve had five days to get that information, Larry,” Wilson said, referring to when the questions were submitted.

 

“I don’t answer to you, Bob,” Kraemer retorted.

 

The TDRA also questioned why a referendum wasn’t held regarding the sale, given that Bruce Telecom is municipally-owned. Kraemer said making the sale public would have undermined the value of the company and cost taxpayers a significant amount of money.

 

Wilson said it is the understanding of the TDRA that the consultants hired to oversee the sale are being paid $540,000. On Thursday, Kincardine CAO Murray Clarke said consulting and legal fees won’t be determined until the sale is finalized, but the consultants will receive a two per cent commission on the sale.

 

During the meeting, Wilson asked Kraemer if he was refusing to provide full details about the sale and the asset purchase agreement.

 

“I would say, yes,” Kraemer responded.

 

It should be noted that council has already stated that details of the process to sell Bruce Telecom and negotiations with Eastlink, held in closed meetings, cannot be made public.