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HawTel's bankruptcy exit gets OK from FCC, awaits PUC's approval

By Alan Yonan Jr.


The Federal Communications Commission yesterday approved Hawaiian Telcom's bid to exit bankruptcy, leaving the state's largest phone company just one more regulatory hurdle to clear.

The FCC signed off on Hawaiian Telcom's "transfer of control," a required step before a new board of directors can officially be seated.

With the FCC approval under its belt, Hawaiian Telcom is now awaiting the blessing of the Public Utilities Commission. A federal Bankruptcy Court judge in November confirmed a reorganization plan that reduced the company's debt to $300 million from $1.15 billion.

"We are very pleased with the FCC's approval, which represents a significant milestone toward concluding our reorganization and strengthening of our company for the future," Eric Yeaman, Hawaiian Telcom president and CEO, said in a news release. "We are hopeful that the PUC will soon issue an equally favorable determination."

Hawaiian Telcom plans to go public after emerging from bankruptcy, issuing 10 million shares of common stock that it will distribute to its main creditors. The company filed for bankruptcy on Dec. 1, 2008.

The FCC delayed its approval of the transfer of control in May after a group of federal agencies, including the Justice Department, FBI and the Department of Homeland Security, asked for more time to review potential national security, law enforcement and public safety issues. On Sept. 3, the agencies gave the all clear.

In its ruling the FCC rejected a request by Time Warner Cable to attach conditions to the approval. Time Warner argued that Hawaiian Telcom failed to meet its statutory obligation to provide access to its utility poles, conduits and rights-of-way in a "reasonable and nondiscriminatory basis." Time Warner maintained that Hawaiian Telcom could quash competition once it emerges from bankruptcy by denying access to those resources.

"After careful consideration of the record in this proceeding we conclude that the concerns raised by TWC are not sufficient to justify denial of the merger application or to impose conditions on the terms of the transfer," the FCC wrote.

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