News of Davidson
TOWN INFORMATION

Town to Hold Public Hearing Regarding Sale of Continuum

by | Aug 9, 2019 | News, Town Information

 

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The Town will hold a public hearing at Tuesday night’s Board Meeting. The August 13 hearing will be held for the purpose of discussing the proposed sale of Continuum. The item is listed as the first item on the Town Board agenda that was published this afternoon (August 9).

On March 18, 2019, the Davidson Board of Commissioners approved Resolution 2019-10 Approving Solicitation of Offers to Purchase Continuum. Should the commissioners vote to approve the sale, such approval will be subject to further approval by a majority of the eligible voters of the Town of Davidson who vote on it at a referendum election expected to be held on November 5, 2019. 

The Town advertised the public hearing in the Charlotte Observer on August 3, 2019.

The Executive Summary posted on the Town’s web site provides the following information:

The parties in the sale: Purchaser – Party to be named later. Seller Parties — MI Connection Communications System (DBA Continuum), Town of Mooresville, Town of Davidson.

Transaction: Seller Parties to sell to Purchaser substantially all assets relating to Continuum.

Purchase Price:

  • Purchase Price of $80,000,000 payable in cash, subject to working capital adjustment, escrow amounts, and provisions obligating Seller Parties to indemnify Purchaser for certain losses caused by breaches of representations and warranties and covenants and for excluded liabilities.

  • Working capital adjustment at the expense of Seller Parties if net working capital is less than $(1,100,000) and for the benefit of Seller Parties if it is more than $(1,100,000).

Use of Proceeds: The net proceeds of sale will be used to satisfy the balance due on the installment financings of approximately $59 million and all other obligations, and the remainder will go to the Towns of Mooresville and Davidson in accordance with their respective interests in Continuum.

Representations and Warranty Insurance Policy (“R and W Policy”) / Indemnity and Escrow Provisions: Purchaser is obtaining an R&W Policy at its expense. The R&W Policy would be Purchaser’s primary recourse for most breaches of representations and warranties by Seller Parties (if there are any such breaches).

  • R&W Policy: $8 million policy with a deductible of $800,000 (with Purchaser generally responsible for the first $400,000, and Seller Parties the second $400,000).
  • Indemnification and Escrows: Claims by Purchaser are subject to indemnification obligations of Seller Parties and escrows as provided in the agreement.

Employees: Purchaser will offer employment to substantially all of Continuum’s employees. Offers of employment to be contingent upon customary hiring criteria of Purchaser.

Conditions to Closing:

  • Town Voter Approval for Mooresville and Davidson (referendum scheduled for November 5, 2019).
  • Accuracy of representations and warranties.
  • Commercial arrangements between Purchaser and the Towns relating to the continued provision of fiber for INet use.
  • Absence of a Material Adverse Effect on Continuum.
  • Payoff of installment financings.
  • Other customary conditions.

Termination Fee: Termination Fee of $2,000,000 payable by Seller Parties if agreement is terminated and, within 2 years, Continuum enters into another transaction.

This summary is provided by Seller Parties.

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