Posted at 3:37 p.m., Wednesday, March 16, 2005
PUC approves Carlyle's Verizon Hawaii acquisition
By Sean Hao
Advertiser Staff Writer
The decision gives Washington, D.C.-investment The Carlyle Group permission to proceed with the deal that's expected to net Verizon Communications Inc. more than $850 million while tripling the debts of the local phone company from $427 million to $1.39 billion.
In approving the deal the commission placed numerous conditions on the sale to mitigate the risks of creating a phone company loaded with debt and to ensure consumers benefit. Those conditions include requiring Carlyle to infuse additional equity into the sale to lower the phone company's debt-to-equity ratio to 76.3 percent from a proposed 82.5 percent.
Carlyle officials contend the sale will return management of the phone company to Hawai'i while boosting local employment and customer service. However, the state consumer advocate and others have expressed concerns that the large debt-load of Hawaiian Telcom, Verizon Hawaii' successor, could increase the risk that lenders could take over the company and sell off assets, if financial goals aren't met - a move that could jeopardize customer service and rates along with the jobs of employees.
"Overall I find the potential risks and the potential benefits in the record ... indicate that the proposed transfer of control does is not in the public interest," PUC Commissioner Wayne Kimura wrote in voting against the sale.
The proposed transaction between Verizon Communications and Carlyle includes Verizon Hawaii's local telephone operations and print directory, long-distance and Internet service provider businesses, but excludes Verizon Wireless.
Reach Sean Hao at shao@honoluluadvertiser.com or 525-8093.