Jilted firm wants 2nd chance to buy iProvo

PROVO — Long before Broadweave Networks came along with a deal to take iProvo off the city's shoulders for $40.6 million plus benefits, MSTARmetro made its own offer to lease the network.

Documents obtained by the Deseret News reveal that in May 2007, MSTARmetro — an iProvo service provider — made an offer to lease the iProvo network.

MSTARmetro said it would assume the city's bond payments — plus interest — and pay back the estimated $13.5 million the city transferred from the energy department to buoy up iProvo.

But that proposal was rejected, MSTARmetro executives said. Now that Provo is looking at the Broadweave offer, they want another bid process where the city specifically states its intent to sell iProvo.

MSTARmetro's Jon Hansen said the company has been advised that the process was "closed, procedurally unfair and ... very likely illegal."

"Make the process fair and open," Hansen, the company's interim president, said. "Let qualified competitors have a shot at it."

MSTARmetro's initial offer was in response to a city-issued request for proposals in April 2007. The company told the city it had financial backing from Clear Creek Partners and had other interested investment firms such as Waller Capital, Prospera360 and Deutsche Bank.

To back up the deal, MSTAR-metro said it would front guarantees for the first three years of bond payments, totaling $7.8 million.

MSTARmetro executives said that when the deal was rejected, they were told it was because their vision "strays from (the city's) original goal of an open access network." Now that the city has turned around and agreed to privatize the network, MSTARmetro executives are questioning the legality of the city's decision-making process.

Hansen spoke to Provo's City Council during its nearly six-hour meeting Tuesday night.

In a letter dated May 23, MSTARmetro executives asserted the April 2007 request was in violation of Utah's Procurement Code.

"The code requires ... that an RFP for the sale of a municipally-owned asset be prepared with specificity and detail as to the asset being sold," Hansen wrote.

City Council Attorney Neil Lindberg said he doesn't think the city did anything inappropriate. "I'm convinced that we have properly followed the legal process," he said.