Mobilicity and Wind are the only two players that appear to qualify to bid on those set-aside licences in Ontario, British Columbia and Alberta.Kevin Van Paassen/The Globe and Mail
A Toronto judge has approved a new round of debt financing for Mobilicity that will allow the company to register to bid in an upcoming auction of wireless airwaves.
The cellular carrier managed to secure the financial backing to register for the auction at close to the last minute, with deposits due on Friday.
The move sets the company up to compete with fellow startup Wind Mobile for airwaves reserved for new entrants already operating in Ontario, British Columbia and Alberta.
Mobilicity, which has been under creditor protection since September, 2013, reached an agreement to enter into a second debtor-in-possession (DIP) financing for $65-million from some of the company's existing debt holders, which Justice Frank Newbould of the Ontario Superior Court of Justice approved Wednesday morning.
The agreement is structured off an earlier DIP financing arrangement for $30-million the company entered into when it first filed for protection under the Companies' Creditors Arrangement Act.
A group of Mobilicity's creditors, who together hold the majority of its debt and are referred to as the "ad hoc committee" in the court proceeding, have largely been controlling decision-making regarding the company's future.
The new financing comes from "certain of the noteholders who are part of the ad hoc committee," according to a filing by Ernst & Young Inc., the court appointed monitor of the company's creditor protection process.
Toronto private equity firm Catalyst Capital Group Inc., which holds about 30 per cent of the company's debt, has been at odds with the ad hoc group of bondholders and was not part of the latest debt funding. A spokesman for Catalyst, which had indicated in November it was open to financing Mobilicity's participation in the auction, declined to comment Wednesday.
Justice Newbould also granted Mobilicity's request for an extension of a stay of legal proceedings against it to May 8.
The federal government structured the auction of spectrum in the AWS-3 (advanced wireless services) frequency band to reserve 60 per cent of the airwaves for companies already providing wireless services with less than 10 per cent of national market share and less than 20 per cent of market share by region.
Mobilicity and Wind are the only two players that appear to qualify to bid on those set-aside licences in Ontario, British Columbia and Alberta. If Mobilicity had been unable to place a deposit, Wind could have acquired those licences for the opening bid price of about $62.5-million.
A spokesman for Industry Canada said in an e-mail Tuesday that the ministry will review the applications received Friday and publish a list of bidders that qualify under the auction rules on Feb. 13.
The deadline for sealed bids in the AWS-3 auction is March 3. Deposits for another auction of airwaves in the 2,500-megahertz frequency are also due Friday, but Mobilicity said last week it does not plan to take part in that auction, which will be held in April.
Mobilicity said that if it plans to actually place a bid in the AWS-3 auction and bid more than $65-million, it will apply to the court for further approval of additional funding.