Mobilicity says it is in ongoing, early-stage discussions with "a number" of interested parties over a possible transaction that could end the restructuring limbo the wireless startup has been in for more than a year.
The Toronto-based company said in court materials filed this week that it is considering a number of "entirely different transaction structures," adding, "discussions are in early stages and continuing with all interested parties, all with a view to advancing a value-maximization transaction that is capable of being implemented, including from a creditor support standpoint."
Mobilicity has been under creditor protection since September 2013, and is asking an Ontario court for a further stay of legal proceedings while it continues efforts to nail down a willing buyer or partner that the federal government would accept.
"There are a number of potential paths forward and discussions continue with a number of parties," chief restructuring officer William Aziz said in an email Tuesday. "While no agreement has been reached with any party at this time, we will continue to update stakeholders as warranted."
Mobilicity has tried to reach a deal with Telus Corp. in the past, but Industry Canada blocked the transaction, stating it would not approve deals that lead to an undue concentration of cellular spectrum in the hands of Canada's incumbent national carriers.
The company's licences for spectrum – the airwaves used to build mobile networks – that Mobilicity acquired in a 2008 public auction for $243-million are one piece of a puzzle that could result in the consolidation of new entrant interests in Canada's wireless industry.
Fellow new entrant Wind Mobile, which is now controlled by a consortium of Canadian and American investors, also has spectrum holdings as well as close to 800,000 subscribers in Ontario, British Columbia and Alberta. And Quebecor Inc.'s Videotron Ltd. division has 589,400 wireless customers in its home province plus valuable airwaves in Ontario and the two western provinces and is considering an expansion.
Both have previously indicated an interest in talks with Mobilicity, but Wind declined to comment Tuesday while a spokesman for Quebecor did not respond to a request for comment.
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 driving decision-making regarding the company's future.
They have repeatedly faced off with Catalyst Capital Group. Inc., which alone holds 30 per cent of Mobilicity's first lien debt.
The court filings indicate the ad hoc group is now in discussions with another noteholder, potentially Catalyst, but the firm declined to comment on that Tuesday.
A Jan. 30 deadline to register to take part in two spectrum auctions next year is a key date in any negotiations that could lead to the consolidation or partnership of some or all of the new entrant players.
In the first auction for spectrum in the AWS-3 frequency bands, 60 per cent of the airwaves are set aside for operating new entrants, meaning if Mobilicity and Wind were to combine forces, they could acquire the licences for Ontario, Alberta and B.C. at the low opening-bid price of $62.5-million.
Bidding in an auction in the United States for the same type of airwaves reached $34-billion (U.S.) over the weekend, and the process is still ongoing.
Although Mobilicity is deep in debt – it had long-term debt of $415-million (Canadian) and total liabilities of $510-million as of March 31 – it is now operating on a "cash flow break-even basis," according to this week's court filings, which also note its customer base is stable and sat at 154,914 as of Oct. 31.
It will ask the court on Thursday to grant an eighth extension of the stay period shielding it from legal action by creditors to Jan. 30 from Dec. 1.