Mobilicity Attempting to Convince Ontario Courts to Force Sales of its Wireless Licences


Mobilicity is preparing to ask the Ontario Superior Court of Justice to force the sale of its wireless licences to Telus or another large carrier after a federal ban on such deals is set to expire in a month. The company plans to ask the court to issue an order allowing them in the future to transfer its wireless licences to another carrier.

The court filings shows that this could still work even if the federal government objects to a potential deal. Specifically the carrier is trying to use a section of the Companies’ Creditors Arrangement Act (CCAA) that allows the court to assign a debtor company’s rights and obligations to another party.

Currently, Mobilicity is evaluating bids as a part of the courts supervised sales process, which has been in place since the fall. The motion relies on the argument that the CCAA’s legislation supersedes other federal laws including the Radiocommunication Act, which gives the industry’s minister the right to issue spectrum licenses and amend their terms. The motion reads:

“In the circumstances, it is impractical to properly evaluate the bids without a clear understanding of the timing and the ability to transfer the Mobilicity Spectrum Licenses to any third party.”

According to many sources, the carrier’s plan does not have a high chance for success. Mobilicity says it has enough money to continue operating until the second week of February, though it is still unclear what they plan to do afterwards.

In an emailed statement Bill Aziz, Mobilicity’s chief restructuring officer, said:

“As part of the CCAA court-approved sales process, the company and the monitor are required, among other factors, to take into account the speed, certainty and value of the competing transactions and the timing of completing any transaction.

With this in mind, Mobilicity has submitted a motion to the Ontario court as part of the ongoing sales process to establish a procedure and process by which the CCAA Court in the future, if needed, would consider the assignment of all or any of the Mobilicity spectrum licences under the provisions of the CCAA. This motion is contingency planning to ensure a fair and reasonable process and that any potential transaction be able to be consummated and completed with the requisite certainty and speed envisioned under the CCAA Court approved sales process.”

Industry Minister James Moore’s press secretary, Jake Enwright said:

“Our thoughts are with Mobilicity’s employees who may have been impacted by this restructuring. Our government will not approve spectrum-transfer requests that decrease competition in our wireless sector. We look forward to the court’s positive ruling on this matter.”

Mobilicity has paid $243.1 million for licences to date since 2008, and by doing so they agreed to a 5 year ban on transferring its licences to any other carriers. The ban is set to expire on February 12, 2014, but it is unclear what the future hold for the wireless carrier.

[via The Globe and Mail]