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Blue Casa Telephone Inc. plans to work out a deal with indirect sales agents for Trans National Communications International Inc. (TNCI), the carrier it expects to acquire out of bankruptcy as early as May 1.
Blue Casa Telephone is the stalking horse bidder in the March 13 sale hearing for TNCI, which filed for Chapter 11 bankruptcy protection Oct. 9, 2011. If declared the winner, Blue Casa then must secure regulatory approvals, but expects the transaction to close May 1. The Santa Barbara, Calif.,-based company is a certified CLEC in California and is working to secure regulatory authority in the other 49 states.
In answer to agents’ expressed frustration over the suitor’s silence on the matter of assuming their contracts, Blue Casa Telephone President and CEO Jeff Compton has asked for patience.
“I think that there’s an artificial deadline or feeling among some agents that this has to be done immediately,” Compton said in a late February interview with Channel Partners, noting that the parties have until the sale’s closing to work out a deal.
“I am extremely sorry that this bankruptcy has gone on so long and people are weary and tired, and I’m sorry they have anxiety,” he said. “The good news is that we are moving incredibly fast. To do that we have done in seven weeks … is phenomenal.”
Since it began the bidding process in mid-December, Blue Casa Telephone was named the stalking-horse bidder, and Compton said that it has worked out deals with 10 of TNCI’s 14 underlying carriers.
“Now we are at the point we can work on deals for employees and agents,” he told Channel Partners.
Compton said the company is talking with agents one-on-one and in groups (i.e., the Agent Alliance, which is part of the creditor’s committee) and expects to have a plan that will enable agents to keep their residual commissions. However, he said all agent agreements may not be affirmed as-is, but may need to be amended.
“There is a reason that companies end up in bankruptcy. It’s because they sign agreements that are not economically feasible whether [they] be with underlying carriers, with vendors and, in some cases, agents. We are looking at those right now,” he said. “We have a plan that would create growth for the company. And, that is important. And, we believe that the agent channel is important.”
Meanwhile, Compton said that agents are being paid and will continue to be paid during auction process and the regulatory approval period.
Compton said agents may take some consolation in his approach to acquisitions. He acquired the assets of Blue Casa Communications Inc. out of bankruptcy in 2011. In the interests of stability, he said he prefers to make the change of ownership as unobtrusive as possible, so that customers notice only an improvement in service. With Blue Casa, branding, billing and staffing stayed roughly the same as examples, he said.
Post acquisition, Blue Casa operated for eight months as a residential-only company, but has since added a small business product line that now boasts 1,000 customers, Compton said.
Assuming the TNCI transaction closes, Blue Casa Telephone’s future commercial business would be sold and billed under the TNCI brand, Compton said. In addition, he hopes to bring on much of the TNCI staff.
Compton said Blue Casa was the first acquisition in what he plans as a rollup strategy to create a national player. TNCI, which is a nationwide company, would be the second and critical building block in that plan. However, Compton already has his sights on a third undisclosed acquisition. The goal, he said, is to drive customer rolls to 250,000 with mostly business accounts.
Compton made the Blue Casa acquisition with a “silent partner,” but said his TNCI bid is backed by Garrison Investment Group.
Before becoming CEO of Blue Casa, Compton spent four-and-a half years as a consultant to telephone companies, helping them improve their business operations. Prior to that he worked briefly as a telecom broker. The bulk of his 18-year career was spent working for competitive telecommunications companies, such as Telscape Communications, where he was, in turn, director of revenue assurance and vice president of regulatory and industry relations. Prior to that, he was network operations supervisor for First World Communications, a fiber overbuilder.