20091030Decision Memo.pdf

DECISION 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