The towns of Mooresville and Davidson are one step closer to ending their foray into the communications business.
In separate meetings Tuesday night, the Mooresville Board of Commissioners and Davidson Board of Commissioners unanimously adopted resolutions approving the sale of Continuum Communications System to TDS Broadband Service, LLC for $80 million.
Continuum employees will be offered employment within TDS to support local and national operations, according to a joint press release emailed by the towns of Davidson and Mooresville. TDS Broadband Service, headquartered in Madison, Wis., employs nearly 2,700 people in 30 states and currently has strong momentum in the broadband and cable industry with expansion of fiber optic networks in multiple markets across the U.S., the news release stated.
“We and Mooresville and Davidson selected TDS because of the strength of its proposal and its leadership in the industry, specifically in areas of our size and geography,” said Robert Guth, interim CEO of Continuum, in a release. “I strongly believe TDS will carry forward our local vision and continue to deliver a next generation set of communication services to our residential and business customers today and for many years to come.”
Both boards also on Tuesday adopted resolutions calling for the proposed sale to be placed on the Nov. 5 election ballot for residents to vote on the sale as required by state statute. Pending majority vote approval, transfer of ownership is expected to occur by the end of the year, the release stated.
The Continuum Board of Directors was also expected to approve the sale Tuesday evening.
“I truly believe that this decision will provide the needed flexibility in our finances to meet our ever-growing town’s needs for years to come,” said Ryan Rase, Mooresville’s acting town manager, at the meeting.
Continuum provides digital cable, internet and phone services to more than 17,000 customers across the Lake Norman area.
Originally known as MI-Connection, the company was established in 2007 as an inter-local agency by the state legislature, Davidson and Mooresville upon the purchase of the bankrupt Adelphia Communications Corporation for $80 million.
Rebranded as Continuum in 2017, the company has saddled both towns with contractual financial obligations to subsidize annual debt service for the company for years.
The Town of Davidson, owning 30 percent of the system’s financial interest, makes a proportionate annual contribution of $1 million to cover the debt service while the Town of Mooresville, the “sole obligor” on the installment financing, owns 70 percent of the system’s financial interest and pays more, according to the town of Mooresville.
According to information provided by the Mooresville finance department, as of June 30, the Town of Mooresville has paid $32.8 million and the Town of Davidson has paid $11.6 million since 2010 in debt payments related to Continuum. The Town of Davidson owes the Town of Mooresville $1.7 million, however, as part of the debt payment agreement, said Deborah Hockett, Mooresville’s chief financial officer.
The net proceeds of the sale will be used to satisfy the balance due on the installment financings of approximately $59 million and all other obligations, according to the town. The remainder will go to the towns of Mooresville and Davidson in accordance with their respective interests in Continuum.
In March, the towns of Mooresville and Davidson announced they were looking for buyers for Continuum based on the company’s current success and the towns’ desire for financial flexibility to invest in infrastructure and other projects, Rase said. Both towns then retained financial advisor RBC Capital Markets to facilitate the sale and Troutman Sanders and Robinson Bradshaw as legal counsel. By April 24, the towns had fielded six offers, all more than $70 million, and selected them to move to the second round of offering, Rase said.
By mid-June, the towns received the second round of offers ranging from $60-$80 million, he said. Final bids of $75-$80 million were submitted from three would-be purchasers by the end of June. On July 1, the towns of Mooresville and Davidson selected TDS Broadband Service, who provided the highest and most responsive offer of $80 million, as the proposed buyer for Continuum. The two towns entered into a contract of exclusivity with TDS Broadband Service on July 3.
One of the non-winning companies then increased its offer but since the towns had already entered into a contract of exclusivity and it was after the set deadline, the towns could not consider the offer, Rase said. The same company then increased its offer again one week later but the towns could not consider the offer, Rase said.
Local officials seemed pleased with the sale Tuesday night.
“After a very intensive sales process, we are pleased to welcome TDS to our communities,” said Davidson Town Manager Jamie Justice in a written statement. “We look forward to them joining us in providing services to our residents and job opportunities for this area.”
At the meeting, Rase thanked the Continuum employees for their diligence in working with the different parties involved in the sale. He also thanked late Continuum CEO David Auger, who died in May, for “the many years of blood, sweat and tears that he invested in Continuum,” Rase said.
Mooresville Board Commissioner Gary West thanked Rase and other town officials for their hard work involved in the sale. “I think it paves the way for a great future for Mooresville,” West said.
Mooresville Board Commissioner Thurman Houston said he was on the board when the towns purchased MI-Connection more than 10 years ago. “It’s great to know we’re at a point now we can give back to the public sector and move forward,” Houston said.
In related business, the Mooresville Board of Commissioners also unanimously approved a budget amendment allowing for the increase in revenue of the general fund by $80 million and an increase in expenditures by $80 million.