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HomeMy WebLinkAbout20091102_2752.pdfDECISION MEMORANDUM TO:COMMISSIONER KEMPTON COMMISSIONER SMITH COMMISSIONER REDFORD COMMISSION SECRETARY LEGAL WORKING FILE FROM:DONN ENGLISH TERRI CARLOCK DATE:OCTOBER 29, 2009 SUBJECT:IN THE MATTER OF MIDV ALE TELEPHONE EXCHANGE, INc.'S PETITION FOR DECLARATORY RULING; CASE NO. MID- T -09-03. On September 22 2009, Midvale Telephone Exchange (Midvale) filed a Petition for Declaratory Ruling requesting the Commission approval of (1) the transfer of all assets and liabilities of Midvale to Midvale Telephone Company (MTC); (2) the proposed contributions by MTC to an employee stock ownership plan (ESOP); and (3) the acquisition by the ESOP of authorized and unissued shares of Midvale stock. Midvale also requests in its Application the transfer of its certificate of public convenience and necessity (CPCN) to MTC. Midvale is currently owned by two shareholders , Lane Williams (50%) and the Estate of Shirley Archer (50%). Since Shirley Archer s death, Midvale has been exploring options to ensure its continued existence and ongoing operations with the least impact on its customers, service and employees. Mr. Williams and Midvale s Board of Directors believe that the best method to achieve these goals is to transfer the ownership of the corporation to its employees through an ESOP. Midvale adopted the ESOP on December 22 , 2008. On August 27 2009, Midvale incorporated Midvale Telephone Company (MTC). Midvale proposes to transfer to MTC all of Midvale s assets and liabilities (including all operating assets, all debt, all public licenses and the CPNC) in exchange for all of the issued and outstanding shares of MTC stock. After the proposed transfer is complete, the DECISION MEMORANDUM OCTOBER 29, 2009 ESOP would acquire a portion of the Midvale stock held by Mr. Williams and the estate of Ms. Archer. Midvale would then redeem the remainder of the shares from the current ownership by delivering to Mr. Williams and the Archer estate a promissory note for the full value of their remaining Midvale shares. Upon favorable Commission ruling and completion ofthe transfer, MTC would adopt the ESOP and contribute funds to the ESOP annually as retirement fund contributions for its employees. Midvale asserts that the proposed transactions are contemplated to be implemented so as to have only minimal, if any, impact upon current Midvale customers and the tax advantages ofthe proposed transaction are substantial. Midvale also requests that the Commission use modified procedure in the consideration of this Petition! Application. ST AFF RECOMMENDATION Staff recommends that the Petition! Application be processed under Modified Procedure with a proposed 28-day comment period. COMMISSION DECISION Does the Commission wish to process this case under Modified Procedure and establish a 28-day comment period? ~on ruJ Terri Carlock udmemoslMidvale Decision Memo DECISION MEMORANDUM OCTOBER 29, 2009