How you can help us buy BT

 

Unlike a few years ago, BT is now a thriving, growing, profitable business. This makes it an attractive property for investors. We expect that to finance the BT acquisition we will need to put together a combination of debt, equity and member/capital financing.

Help Finance Keep BT Local Directly

If, in the past, you have pledged to provide Keep BT Local with additional capital please contact the Board at [email protected] and they can provide you details on how to invest. Even if you haven’t pledged to provide additional capital, but you are interested in investing in Keep BT Local, you should also contact the Board.

Help Finance Keep BT Local Indirectly

Even if you are not looking to finance Keep BT Local directly, there are other ways to help us indirectly. In order to raise enough capital to make a competitive offer, it is likely that we’ll have to raise more cash than our members can provide. In order to do this effectively, we will need to raise funds at comparatively low interest rates.

Here’s why: If we borrow from a high-interest rate lender, the cost of the loans could well be more than is justified by BT’s revenues. The problem is that the lower-interest-rate lenders (typically banks and credit unions) are subject to regulations which effectively require borrowers to have at least two ways to guarantee that they will repay the loan. These are:

  1. Income from the business.
  2. Some form of hard collateral that could be sold off to cover the cost of the loan, often real estate, inventory, factory equipment or vehicles.

Income is not a problem, but property is. As it turns out, given the nature of the telecom business, BT owns very little re-sellable property.

First of all, even if its miles of fiber could be dug up or cut down (they can’t, according to a court decision) and resold, they would be worth next to nothing.

Second, due to the fast pace of evolving technology, BT’s very expensive equipment lost much of its resale value the day it was installed and would lose the rest of its value if it were to be disconnected from the network.

And third, BT currently owns no real estate of its own. This is why Merchants Bank structured their loan so that Bluewater Holdings is providing a third-party guarantee for the loan, which de facto is the second way the Bank can get paid.

If we are to purchase BT, we will need to find significant collateral or guarantees to secure our loans. This may seem like a daunting task, but perhaps Bluewater Holdings is not the only local entity who understands the value of local ownership for BT, and would be willing to invest in its future by providing collateral.

Furthermore, we are in the process of looking for ways to pool smaller pieces of collateral, such as homes, so that individuals can also participate in this indirect investment process.

This strategy, while more involved than writing a check, would allow you to play a significant part in the purchase of BT, without having to divert cash from other investments. At this point, due to lender limitations, it appears that this strategy would require a participant to pledge a minimum of $100,000 in assets.

If you, or someone you know would like to hear more about this, please contact us at [email protected]

Comments are closed.

i