Securus Told Pai All States OK'd Sale, but Alaska and California Still Deciding
Securus needs at least two state regulatory OKs for its sale to Platinum Equity, despite Securus CEO Richard Smith telling the FCC last week the company got OKs from all states needed. With an FCC decision expected soon, the Regulatory Commission of Alaska (RCA) said Wednesday it will decide by Dec. 11. Earlier, the California Public Utilities Commission said it couldn’t issue an order until at least its Aug. 10 meeting (see 1708010030). Securus targeted an Aug. 1 closing date and recently warned it would incur $75,000 in transaction fees on every day after Aug. 1 that the deal wasn’t closed. The Securus deal is still under review, an FCC spokesman said Thursday.
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The CEO last month said the company got all state approvals. The assertion came in a July 26 letter urging FCC Chairman Ajit Pai to quickly close the sale to Platinum subsidiary SCRS Acquisition. “We have not yet received approvals from the FCC, but we have received approvals for 48 of 48 state money license transfer approvals, Hart Scott Rodino Justice Department approval, and all necessary State/PSC/PUC approvals,” said the letter, also signed by Deutsche Bank Managing Director Manfred Affenzeller. “All approvals to close are now completed with the exception of the FCC's approval.” The Securus and Deutsche Bank officials said the company would incur “substantial costs for each day beyond our scheduled closing date,” which was Aug. 1. Securus didn't comment now.
“We will issue a final order in this proceeding no later than December 11​, 2017,” the RCA said in a Wednesday order in docket U-17-040 that also granted the companies’ petition for confidential treatment. Alaska statute requires the RCA to issue final orders within 180 days of a completed application, the commission said. The companies met all other filing requirements, so the joint application was complete as filed June 14, the RCA said. Alaska has more than 700 certificated public utilities and the 180-day statutory timeline is “important so that the Commission can carefully review the applicant’s service area and scope of operations, and ensure that the applicant is fit, willing, and able to provide service,” an RCA spokeswoman said Thursday.
California commissioners aren’t scheduled to take up the Securus deal next week, said a meeting agenda posted Wednesday.
“Effective regulation by the FCC requires it to depend on parties to act with candor, and the fact that California and Alaska had not yet approved the transaction when Securus met with FCC staff on July 27th raises serious concerns that Securus provided incorrect information when it averred that it had already obtained ‘all necessary State/PSC/PUC approvals,’” said Drinker Biddle attorney Lee Petro for the Wright Petitioners, who oppose the deal: “Rather than responding to the Securus-induced false urgency to immediately process the transaction," the FCC "must make a fact-based determination whether the transaction is in the public interest, convenience and necessity.”
The Wright Petitioners notified the FCC about the Alaska order in a Thursday ex-parte letter, saying it “adds to the serious concerns that Securus provided misleading information” to the FCC. Wednesday, the petitioners sent a letter to California -- copied to the FCC in docket 17-126 -- notifying the commission of Securus claims that all state regulatory approvals were complete. The CPUC didn’t comment.
If Securus must pay fees and the delay getting regulatory OKs is material, the company "has the liquidity and balance sheet cash that's more than sufficient to meet such fee burdens," Moody's analyst Neil Mack said in an interview. Inmate calling services is a mature industry with little growth and two dominant companies -- Securus and Global Tel*Link -- taking most of the revenue, Mack said.