'Modified closing' is reached in iProvo deal

PROVO — City officials and Broadweave Networks may have reached a "modified closing" in the iProvo transaction Monday night, but City Councilman George Stewart says the deal's not done yet.

"A closing isn't a closing until it's a closing," he said. And as long as it's not closed, the city is exposed to the risk the deal won't go through, he added.

Provo officials and South Jordan-based telecommunications company Broadweave Networks signed closing documents late Monday night to transfer operation of the citywide fiber optic network. The final settlement will take place within 60 days.

Not every detail has been ironed out, Billings said, but the deal is sealed.

"While everything has not been finalized ... the transaction between Provo and Broadweave is, for all intents and purpose, complete," he said.

Billings said the date of the final settlement was delayed to allow potential investors to complete due diligence. Sorenson Capital — a private equity firm — has been evaluating an investment in Broadweave and still needs to complete its analysis of the proposed sale.

Sorenson managing director Fraser Bullock was unavailable for comment, but issued a statement saying, "There proved to be insufficient time to complete all of the required legal and business due diligence analysis before the June 30 deadline."

Under the terms of the deal, the city will receive a $40.6 million payment for the network by taking out a loan in what's described as an owner-financed transaction.

Broadweave will immediately assume operation of the iProvo network and will make monthly bond payments of $277,000 for the next 19 years to pay off Provo's bonds, plus interest, for a total of about $63.2 million. Broadweave will also put up a $6 million surety in case the company misses a bond payment.

Although the city and Broadweave have entered into an interim network operation agreement pending the final settlement, Broadweave CEO Steve Christensen said he doesn't expect the deal to fall through.

"I'm very confident in this deal going forward," he said.

Christensen said Broadweave will keep in touch with customers over the coming weeks to keep them apprised of the transition process. He said the company will honor their existing package prices. He also said they will send out letters to current customers offering them rebates of one month credit if they sign up for a year of service. He said customers should anticipate a smooth transition, with only one difference.