Small wireless company Mobilicity is starting a restructuring process that could see the sale or recapitalization of the small, debt-laden cellphone company.
Mobilicity said Friday that debtholders will be asked to approve both a plan to sell the company and a recapitalization plan at a meeting on May 21.
Five years after Ottawa auctioned off the radio waves over which cellphone networks operate to allow several new companies to launch in Canada it appears that Mobilicity, Wind Mobile and Public Mobile could all be sold.
Dutch owner VimpelCom has put Wind Mobile up for sale, opening up the possibility that a bigger company could swoop in and pick it up and it has been reported that Public Mobile has hired an investment banker to find a buyer.
Mobilicity said Friday the company would use proceeds from a sale to repay its debt.
“The purchase price received would be applied to repay all of the outstanding first and second lien debt of Mobilicity, with the remainder being used to repay outstanding unsecured debt securities issued by Mobilicity,” the company said in a statement.
y said it will go ahead with the recapitalization plan.
Under the recapitalization plan, the share capital of Data & Audio-Visual Enterprise Holdings Inc. – Mobilicity’s legal name – would be reorganized, certain debt would be repaid and Mobilicity would get funds to continue operating.
The process has been approved by the Ontario Superior Court of Justice.
Mobilicity said it had no further comment the matter.
There have been reports that Telus (TSX:T) has been in talks with Mobilicity to buy the small carrier, which launched its service three years ago in May 2010.
© The Canadian Press, 2013