STEPTOE 6r
JOHNSON
Chase Tower, Eighth Floor
A T T O R N E Y S AT LAW
www.steptoe-johnson.com
PLLC
P.O. Box 1588
Writer’s Contact Information
(304) 353-8148 -Telephone
(304) 353-81 80 - Facsimile
Charleston, WV 25326-1588
[email protected]
(304) 353-8000
(304) 353-8180 Fax
I ’
June 21,2013
VIA HAND DELIVERY
Ms. Sandra Squire, Executive Secretary
Public Service Commission of West Virginia
201 Brooks Street
Charleston, West Virginia 25323
Re:
OW6 PN &&
CASEN0.13- oqo%
-T-PC
BIRCH COMMUNICATIONS OF THE NORTHEAST,
INC,, dba BIRCH COMMUNICATIONS and
LIGHTYEAR NETWORK SOLUTIONS, LLC
Joint Petition for consent and approval to transfer
certain assets
Dear Ms. Squire:
Enclosed for filing on behalf of Birch Communications of the Northeast, Inc., dba
Birch Communications, please find the original and twelve (12) copies of the Joint Petition for
consent and approval to transfer certain assets.
I ask that you please file the enclosed Joint Petition and distribute the additional
copies to the appropriate parties at the Commission. Also, please date stamp the file copy
provided and return it with our messenger.
Thank you in advance for your attention to the foregoing, and please contact me
should you have any questions.
Sincerely,
Todd M. Swanson
TMS
Encl.
073820.00001
I
6293355.1
West Virginia
Ohio
Kentucky
Pennsylvania
Texas
TERRALEY
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1.1
PUBLIC SERVICE COMMISSION
OF WEST VIRGINIA
CHARLESTON
CASE NO. 13-
-T-PC
BIRCH COMMUNICATIONS OF THE NORTHEAST,
INC., dba BIRCH COMMUNICATIONS and
LIGHTYEAR NETWORK SOLUTIONS, LLC
Joint Petition for consent and approval to transfer certain assets
JOINT PETITION
COME NOW
Lightyear Network Solutions, LLC (“Lightyear”) and
Birch
Communications of the Northeast, Inc., dba Birch Communications (“Birch”) (collectively, the
“Joint Petitioners”) and, pursuant to W. VA. CODE6 24-2-12, jointly petition the Public Service
Commission of West Virginia (“Commission”) for all required consents and approval to
accomplish the Proposed Transaction (defined below):
-
SECTION I INTRODUCTION
1)
The names and addresses of the Joint Petitioners are:
Birch Communications of the Northeast, Inc., dba Birch Communications
2300 Main Street, Suite 340
Kansas City, MO 64108
Lightyear Network Solutions, LLC
1901 Eastpoint Parkway
Louisville, KY 40223
2)
Birch is a Delaware corporation offering competitive local exchange and
interexchange services. Birch is seeking authority from the Commission to provide resold
intrastate interexchange telecommunications services in West Virginia under Case No. 13-0386T-CN; pursuant to a Recommended Decision dated June 12, 2013, the presiding Administrative
6293355.1
I
Law Judge approved Birch’s certificate application. Birch is a wholly-owned subsidiary of Birch
Communications, Inc. (“BCI”), a privately-held Georgia corporation. Numerous states have
authorized Birch and its affiliates to provide telecommunications services in 48 states and the
District of Columbia, with an application in Arizona pending.
Lightyear is a Kentucky limited liability company offering competitive local
3)
exchange and interexchange services. Pursuant to a Final Order dated February 27, 2004 in
Docket No. 03-2038-T-PC, the Commission certificated Lightyear to provide facilities based and
resold local and interexchange telecommunications services.
SECTION I1 - DESCRIPTION OF THE PROPOSED TRANSACTION
4)
On May 10, 20 13, BCI and Lightyear entered into an Asset Purchase Agreement
(“Agreement”) pursuant to which BCI will purchase the following assets from Lightyear: certain
customer accounts and receivables; certain customer agreements and contracts; certain vendor
agreements and contracts; certain equipment; and certain intellectual property (“Proposed
Transaction”). BCI, however, will not assume any of Lightyear’s pre-closing liabilities or
obligations.
Birch is not acquiring any physical West Virginia assets in the Proposed
Transaction.
5)
The Joint Petitioners negotiated the Agreement and sales price at arm’s length,
The sales price was determined based on the value of the assets being transferred.
6)
The Proposed Transaction will not result in any change of control or ownership in
either Lightyear or Birch. Upon completion of the Proposed Transaction and the migration of
customers to Birch, Lightyear will no longer offer telecommunications services in West Virginia,
After Lightyear determines that it no longer needs its West Virginia authorizations for
6293355.1
2
operational or billing purposes, Lightyear will surrender its authorizations and cancel ts tariffs in
a separate filing.
7)
Customers will be given prior written notice of the transfer of their account to
Birch, in compliance with federal and state customer notice rules. A copy of the customer notice
is attached as Exhibit 1. The Joint Petitioners expect the customer transfer to occur on or around
September 15,2013, assuming the receipt of all necessary regulatory approvals.
8)
The transaction will be financed using funds held by Birch and its parent
companies.
SECTION I11 - COMMISSION JURISDICTION
9)
The Commission is required to consent to and approve certain acts by public
utilities and others. See generally W. VA. CODE0 24-2-12. Commission consent and approval is
required when, among other things, a public utility proposes to “assign, transfer, lease, sell, or
otherwise dispose of its franchises, licenses, permits, plants, equipment, business or other
property of any part thereof. . . .” Id.
10)
0 24-2-12(c).
Pursuant to W. VA. CODEtj 24-2-12, the Joint Petitioners must show that the (i)
terms and conditions of the Proposed Transaction are reasonable, (ii) that neither party has an
undue advantage over the other, and (iii) Proposed Transaction does not adversely affect the
public.
SECTION IV - ADVANTAGES OF THE TRANSACTION
11)
Approval of the Joint Petition serves the public interest. Birch intends to make
high-quality service available at low rates. As a result of the Proposed Transaction, West
Virginia consumers will realize increased options in the local and long distance market.
Moreover, the Proposed Transaction will also serve the public interest by increasing the
6293355.1
3
competitive pressure felt by existing local and inter-exchange carriers, spurring them t o lower
costs and improve services in response. Specific anticipated costs and savings have not been
identified or quantified.
12)
The Proposed Transaction will ensure that affected customers enjoy continuity of
high-quality telecommunications service. Following the transaction, the affected customers will
continue to receive services consistent with the quality of services currently provided by
Lightyear, which will be supported by Birch’s experienced and well-qualified management team.
As a result, the Proposed Transaction will be transparent to Lightyear’s customers.
Consequently, the Proposed Transaction will not have a negative impact on the public interest,
services to West Virginia customers, or competition.
13)
Following approval of the Proposed Transaction, Birch will file revised tariff
sheets incorporating Lightyear’s current services and rates so that affected customers will
continue to receive the same services that they currently receive without any immediate changes
to their service offerings, rates, or terms and conditions.
SECTION V - SATISFACTION OF STATUTORY TEST
14)
Reasonableness of Terms. The Proposed Transaction is reasonable as between
the parties and as to Lightyear’s current West Virginia customers. Birch brings a proven
management team with the knowledge, experience and resources to conduct the utility operation
in a manner designed to provide adequate and reliable service at reasonable rates.
As
demonstrated in the financial information provided in Exhibit 2, Birch is financially capable of
providing services to the customers of Lightyear in West Virginia.
i
6293355.1
4
15)
No Undue Advantage.
Birch and Lightyear negotiated and agreed to the
Proposed Transaction completely at arm’s length, and neither party exercised any advantage over
the other during that process.
16)
No Adverse Affect on Public. Birch has the requisite financial, managerial, and
technical capabilities to own and operate Lightyear’s West Virginia utility assets. The Proposed
Transaction will not adversely affect Lightyear’s existing West Virginia customers, including
rates and customer service. To the contrary, Lightyear’s existing West Virginia customers will
benefit from Birch’s substantial expertise in the ownership and operation of telecommunications
companies. Nor will the Proposed Transaction have an adverse impact on any other West
Virginia utility.
SECTION VI - CONCLUSION
WHEREFORE, the Joint Petitioners respectfully request that the Commission:
(i)
approve the Proposed Transaction prior to September 15,2013;
(ii)
retain this case for decision; and
(iii)
grant such other relief as the Commission deems required or appropriate to
approve the Proposed Transaction.
6293355.1
5
I
Respectfully submitted,
LIGHTYEAR NETWORK
SOLUTIONS, LLC
BIRCH COMMUNICATIONS OF
THE NORTHEAST, INC., dba
John J. Greive
Vice PresidendGeneral Counsel
Lightyear Network Solutions, LLC
1901 Eastpoint Parkway
Louisville, KY 40223
E. Dandridge McDonald (WVSB No. 2439)
Kurt L. Krieger (WVSB No. 4927)
Todd M. Swanson (WVSB No. 10509)
STEPTOE
& JOHNSONPLLC
P. 0. Box 1588
Charleston, WV 25326-1588
304-353-8113 (telephone)
304-353-8180 (facsimile)
Attorneys for Birch Communications of
the Northeast, Inc., dba Birch
Communications
June 21,2013
~
6293355.1
6
EXHIBIT 1
Customer Notice
6293355.1
LIGHTYEA
Network Solution
IMPORTANT NOTICE
REGARDING A CHANGE IN YOUR TELECOMMUNICATIONS SERVICES
Dear
Birch Communications (“Birch”) and Lightyear Network Solutions (“Lightyear”)
are pleased to announce that Birch is acquiring Lightyear’s local telephone and long
distance telephone customers, as well as certain other customers receiving additional
types of services from Lightyear. Subject to approval by the Federal Communications
Commission and state regulators as necessary, Birch will replace Lightyear as your
current telecommunications service provider on or after [30 DAYS AFTER LETTER
DATE], 201 3 (the “Transfer Date”). As a result of this transaction, Birch will assume
responsibility for all services previously provided to you by Lightyear. Birch is excited
about the opportunity to provide your telecommunications service(s) and looks forward
to a long and mutually rewarding business relationship.
Please rest assured, the transition will have little or no impact on your current
services, nor will there be any interruption of your service. The agreement between
Birch and Lightyear has been structured so that the transfer of service will be virtually
seamless, other than the possibility of a minor change to your voice mail service for
which you will receive additional information.’ There, however, may be other changes
to your service plan based on Birch’s unique billing systems (e.g.,customers currently
utilizing a message or measured local service plan may be switched to a flat rate plan).
In those cases, Birch will transition you in a neutral manner with no increase to your
regular monthly recurring charges. You will retain all other service rates, features,
terms, and conditions of service and your telephone number. Birch will not impose any
charges for the transfer of your services to Birch and no action is required from you
1
It will be necessary for you to reset your password and re-record your message greeting(s).
Additionally, saved messages at the time of the transfer will no longer be retained. Birch will provide
further details in a follow-up letter.
FCC and all other states
to continue your telecommunications service@)with Birch. You will receive your
first billing statement from Birch starting with your [MONTH] 2013 or [MONTH] 2013 bill.
As in the past, you are responsible for paying all bills rendered to you by Lightyear
during the transition of service.
*
You do have the right to select a different carrier for your telecommunications
service(s). If you choose to switch to an alternate carrier for services, you may incur a
fee from that alternate carrier for the transfer of services to that alternate carrier. If you
select a local telephone service provider other than Birch, you should also contact your
current long distance provider to ensure that your current long distance plan is not
changed. Please note that if you are a customer of Lightyear on the Transfer Date as
set forth above, your account will automatically be transferred to Birch. In addition,
should you have a term commitment with Lightyear and you disconnect or transfer
services to another carrier prior to the end of that term, you will be liable to Birch for any
applicable early termination charges, subject to applicable law. Please note that when
your service is transferred to Birch, any preferred carrier “freeze” you have placed on
your existing telephone lines to prevent unauthorized transfer of your services to
another carrier will be over-ridden for purposes of this transaction and will need to be
reinstated by you by contacting Birch after the transfer is complete.
If you have any questions regarding this transaction or questions about your
service or billing prior to the Transfer Date set forth above, you should contact Lightyear
at: 800-393-7300.
If you have any questions regarding this transaction, or questions about your
service or billin after the Transfer Date set forth above, you should contact Birch at
888-772-4724.
#
Lightyear thanks you for your business and Birch looks forward to providing you
with quality service for many years to come.
Sincere1y ,
Lighyear Network Solutions and
Birch Communications
2
Those customers interested in setting up online payments will be pleased to know Birch offers
online payments and account updates.
About Birch Communications - Headquartered in Atlanta, Georgia, Birch Communications is
one of the largest competitive local exchange carriers in its 48-state footprint, serving residential and
business customers. Birch was the first in its class to deploy its own private IP network utilizing soft
switch technology to deliver innovative, high quality, affordable voice and broadband communications
services to small- and medium-sized business customers.
3
FCC and all other states
EXHIBIT 2
Birch Financials
6293355.1
WEST VIRGINIA
ANNUAL REPORT OF BIRCH COMMUNICATIONS OF THE NORTHEAST, INC.
12/31/2011
Line No.
Account
BALANCE SHEET
Balance at
Beninninn of Year
Balance at End
of Year
Increase
JDecrease)
Current Assets
2
4
5
6
21
1180-1210
Net Receivables
1290-1330
Prepaid Accounts
1350
Other Current Assets
Total lines 1 - 5
699,216.06
720.69
Total Assets & Other Debits
699,936.75
450,327.23
112,213.26
295,326.37
857,866.86
(248,888.83)
111,492.57
295,326.37
157,930.11
699,936.75
857,866.86
157,930.11
22
26
Current & Accrued Liabilities
4010-4640
Accounts & Notes Payables
Total lines 22 - 25
517,472.30
517,472.30
457,122.30
457,122.30
(60,350.00)
(60,350.00)
30
33
Other Liabilities & Deferred Credits
Other Liabilities & Deferred
4310-4360
Credits
Total lines 30-32
121,352.52
235,315.22
113,962.70
121,352.52
235,315.22
113,962.70
165,429.34
165,429.34
104,317.41
104,317.41
857,866.86
157,930.11
37
39
Retained Earnings
Appropriated & Unappropriated
4550
Retained Earnings
Total lines 34 - 37
Total liabilities & Other Credits
61,111.93
61,111.93
699,936.75
INCOME STATEMENT (for BC of Northeast)
Balance at
Balance a t End
Beginning of Year
of Year
Account
Operating Revenues
Operating Expenses
Total Expenses
Net Operating Revenue Before
Taxes
Line No.
1
2
5
6
1/1/2011
12/31/2011
5,166,107.92 4,879,111.65
5,061,790.51 4,834,879.03
5,061,790.51 4,834,879.03
104,317.41
44,232.62
11
F.rt Income Before Extraordinary Items
104,317.41
44,232-62
13
Net Income
104,317.41
44,232.62
Operating Revenues (for BC of Northeast)
Balance at End
Balance a t
Beginning of Year
of Year
4
Account
Local Network Svcs & Access
Revenue
Long Distance Network Svcs
Revenue
Total Operating Revenues
Before Uncollectibles
6
Total Operating Revenues
Line No.
1
5000
2
5100
1/1/2011
12/31/2011
4,789,824.96
4,566,838.49
376,282.96
312,271.16
5,166,107.92
4,879,109.65
5,166,107.92
4,879,109.65
Operating Expenses (for BC of Northeast)
Balance a t
Balance at End
Beginning of Year
of Year
Line No.
3
4
5
Account
6611-6623
Customer Ops Expenses
Corporate Ops Expenses
6710-6790
Total Operating Expenses lines 1- 4
1/1/2011
12/31/2011
2,981,030.38 2,851,835.88
2,080,760.13 1,983,043.15
5,061,790.51
4,834,879.03
) .
COMMONWEALTH OF KENTUCKY
I
I
1
1
COUNTY OF JEFFERSON
VERIFICATION
I, John J. Greive, Vice PresidentlGenerd Counsel of Lightyear Network Solutions, LLC,
have reviewed and am familiar with the foregoing document. The statements in the foregoing
document are true of my own knowledge, except as to matters which are herein stated on
Somation and belief, and as to those matters, I believe them to be true.
&//-13
Date
Title: Vice PxesidenVGeneral Counsel
Lightyear Network Solutions, LLC
Subscribed and swo& to before me this
//
@
day of June, 2013.
Notary Public
My Commission Expires: 7-6
STATE OF
GEORGIA
)
COUNTY OF
BIBB
1
1
VERIFICATION
ing document are true of
in stated on information and belief, and
s, I believe them to be true.
Title: PresidentlCEO
Birch Communications, Inc.
Subs