ECFiber selects Oppenheimer to fund FTTH build

JULY 14, 2008 -- At a July 8th meeting of the ECFiber Governing Board, Loredo Sola, executive committee chair, announced that ECFiber has engaged Oppenheimer & Co., Inc., a New York-based investment bank, to provide financing for ECFiber's 23-town high-speed fiber-optic network. Oppenheimer will broker a non-recourse capital lease in the form of Certificates of Participation (COPs). (See "Vermont gets serious about FTTH".)
 
According to Kim Mooers of Sovereign Securities, who is acting as ECFiber's advisor in the deal, Oppenheimer is essentially breaking the $85 million lease into pieces and bringing them to market in a public offering. Each "piece" is called a "certificate of participation" (in the Lease) and the entire mechanism is called a "COPs" financing.
 
Sola said Oppenheimer was selected from three qualified bidders because of its experience with COPs for fiber-to-the-home projects, its understanding of the project and the deal, its proven track record of succeeding with the sale of the certificates, and its reputation in the market. Apart from a nominal initial signing fee, Oppenheimer has agreed to make all fees and out-of-pocket costs contingent on the success of the financing.
 
"This is a very big deal," contends project director Tim Nulty, formerly of Burlington Telecom. "Oppenheimer is risking a lot of money to put this together. If it doesn't come through, they get nothing but the signing fee. You can be sure that they would not enter into such an agreement if they were not very confident that they can complete the financing," he contends.
 
Now begin the important tasks for ECFiber towns: disclosure and "due diligence." Oppenheimer needs to be sure that all the participating towns are on solid financial and legal footing. To ensure this information is thorough and complete and that it complies with all legal requirements, ECFiber has retained Boston law firm Greenberg Traurig to help the 23 towns provide Oppenheimer with the information it requires.
 
The "working target date" for closing is currently October 30, but Nulty is cautious. "I've done a lot of complex financings, and I know that there are always bumps in the road," he says. "Realistically, I will be delighted if the money is in the bank by the end of the year."
 
ECFiber expects to break ground in late Spring of '09 and begin connecting customers in October '09. Nulty says that the pre-registration effort is going so well that it is starting to make economic sense to do customer connections at the same time the fiber is hung on the poles in towns with high pre-registration rates. The town of Barnard, VT, currently leads the pack at 73%.
  
ECFiber is a community-owned, subscriber-funded project to build a Fiber-to-the-Home network to provide phone, television, and ultra-high-speed internet services to 100% of the homes and businesses in 23 towns in East-Central Vermont.

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