Attachment STSJ SCL Assignment. SCL-T/C-20090615-00015

Attachment STSJ SCL Assignment.

This document pretains to SCL-T/C-20090615-00015 for Transfer of Control on a Submarine Cable Landing filing.

IBFS_SCLTC2009061500015_717379

Before the
FEDERAL COMMUNICATIONS COMMISSION
Washington, D.C. 20554

)
In the Matter of )
)
Primus Telecommunications Group, )
Incorporated, Debtor-in-Possession )
) File No. SCL-ASG_______
and )
)
The St. Thomas and San Juan )
Telephone Company, Inc. )
(Licensee) )
)
for Approval of Assignment of an Interest in a )
U.S. Submarine Cable Landing License Held )
__________________________________________)

APPLICATION

JOINT APPLICATION FOR ASSIGNMENT OF INTEREST IN A SUBMARINE
CABLE LANDING LICENSE– STREAMLINED PROCESSING REQUESTED

The St. Thomas and San Juan Telephone Company, Inc. (“STSJ Telephone” or

“Licensee”) along with its ultimate parent company, Primus Telecommunications Group,

Incorporated, Debtor-in-Possession (“PTGI”; together with Licensee, “Applicants”), through

undersigned counsel and pursuant to an Act Relating to the Landing and Operation of

Submarine Cables in the United States, 47 U.S.C. §§ 34-39 (1994), Executive Order No.

10530, and Section 1.767 of the Commission’s Rules, 47 C.F.R. § 1.767, respectfully request

that the Commission, to the extent that it deems that an indirect transfer of control of Licensees

will occur and such authority is necessary, grant requisite authority in connection with a planned

consensual financial restructuring (“Restructuring”) of PTGI under Chapter 11 of the

Bankruptcy Code. Pursuant to the Restructuring, it is contemplated that approximately $315

million, or over 50%, of the outstanding principal debt obligations of PTGI and affiliated non-

operating holding companies, including Primus Telecommunications Holding, Inc. (“PTHI”),

will be reduced.1 In addition, interest payments will be reduced by over 50% and certain debt

maturities will be extended. The combination of these outcomes will dramatically improve the

liquidity of the affected entities.

Currently, equity ownership of PTGI is widely dispersed so that no entity wields legal

(de jure) or actual (de facto) control of PTGI. At the completion of the Restructuring,

Applicants do not expect that any single entity or group of entities will obtain or hold a

majority interest or the ability to exercise actual working control in PTGI (or, indirectly, in the

Licensee).2 This purely financial Restructuring, in which the existing equity in PTGI will be

extinguished and certain note holders will exchange their debt for equity in the restructured

PTGI, will enable the Licensee’s current operations to continue without interruption or any

changes to the rates, terms and conditions of the services that their customers currently

receive. The Restructuring only involves non-operating holding companies and will therefore

be entirely transparent with respect to services provided to the Licensee’s customers.

The Applicants respectfully request streamlined, expedited treatment of this

Application pursuant to Section 1.767(j) and (k) of the Commission’s Rules, 47 C.F.R. §

1.767(j) and (k). This Application qualifies for streamlined treatment because none of the

Applicants is affiliated with any foreign telecommunications carriers, and none of the

scenarios outlined in Section 63.12(c)(2)-(4) of the Commission’s Rules applies.

1
On April 14, 2009, Applicants notified the Commission that PTGI, the ultimate parent of
Licensee, and PTHI, the direct parent of PTI and the indirect parent of STSJ Telephone, each filed a
petition with the United States Bankruptcy Court for the District of Delaware to reorganize under
Chapter 11. The Chapter 11 cases are being jointly administered under the caption In Re: Primus
Telecommunications Group, Incorporated, et al., Debtors Case No. 09-10867 (KG).
2
The precise distribution of equity ownership of PTGI will not be known until PTGI emerges
from bankruptcy. Upon emergence, the new equity will be predominantly owned by note holders who
will exchange their debt for stock.
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I. APPLICANT ST. THOMAS AND SAN JUAN TELEPHONE COMPANY, INC.

The St. Thomas and San Juan Telephone Company, Inc. (“STSJ Telephone”) is

organized under the laws of the U.S. Virgin Islands and maintains its principal offices at 7901

Jones Branch Drive, Suite 900, McLean, Virginia 22102. STSJ Telephone is authorized to

provide interexchange services in the U.S. Virgin Islands and is authorized by the

Commission to provide interstate and international services as a nondominant carrier.

II. DESCRIPTION OF THE TRANSACTION

On March 16, 2009, PTGI and certain of its non-operating holding company affiliates

(not including Licensee) filed petitions with the Bankruptcy Court to reorganize under Chapter

11 (hereinafter, PTGI and the other Debtors will be referred to as the “Debtors”).3 The Debtors,

along with certain secured creditors and note holders, have agreed on a proposed Plan, which,

among other things, will materially improve the capital structure and liquidity of the company in

order to ensure that its operating subsidiaries, including the Licensee, will have access to

sufficient financial resources needed to meet their working capital, debt service and capital

expenditure needs. The financial Restructuring and consummation of the Plan will allow the

Debtors to emerge from bankruptcy and eliminate approximately $315 million of debt.

Among other things, the Plan provides that (1) the common stock now held by the equity

holders of PTGI will be extinguished as of the effective date of the Plan and (2) certain note

holders will receive substantially all the new common stock of the reorganized PTGI in

exchange for releasing their claims. Currently, the equity ownership of PTGI (and, indirectly,

of Licensee) is widely held such that no entity wields legal, majority control or exercises

actual working control over PTGI’s voting stock. Following consummation of the Plan, it is

3
See Primus Telecommunications Group Incorporated, et. al., Debtors, Case Nos. 09-10867
(KG) through 09-10970 (KG), U.S. Bankruptcy Court (DE filed Mar. 16, 2009).
3
A/73062923.1

expected that reorganized PTGI’s equity will also be held by diverse and unaffiliated entities,

such that after the Plan is consummated, no entity is expected to hold legal majority control or

actual working control of PTGI’s voting stock. Accordingly, Applicants respectfully request

authority, to the extent required, to transfer indirect control of the Licensee in connection with a

planned consensual Restructuring that will change the capital structure of PTGI.

Given that the proposed transaction only involves non-operating holding company

entities, Licensee expect that the proposed transaction will be entirely transparent to its

customers. The proposed transaction will not result in any transfer of Licensee’s operating

authority, change Licensee’s managerial and technical capabilities to provide service, or

change the day-to-day operations of the cable systems.

III. The Proposed Transaction Will Serve the Public Interest

Applicants submit that the financial Restructuring serves the public interest. In

particular: (1) the Restructuring will enhance the financial strength of PTGI and therefore of

Licensee and (2) the Restructuring will benefit competition in the federal telecommunications

market by ensuring that the Licensee remains a viable competitor.

The Restructuring is primarily related to the capital structure and ultimate ownership

of PTGI and will not affect Licensee’s operations. The company that emerges from

bankruptcy will be much stronger financially with significantly reduced debt. In addition,

PTGI’s improved financial position is expected to benefit the operations of Licensee. The

continued vitality of PTGI and its operating companies after the completion of the bankruptcy

will assure that the Licensee will be positioned to continue to offer competitive services to the

ultimate benefit of consumers.

Moreover, the Restructuring will not adversely impact Licensee’s customers because

the Restructuring is not expected to adversely affect Licensee’s managerial or technical

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A/73062923.1

capabilities or qualifications to provide service. Licensee’s rates, terms and conditions of

services will be unaffected by the Restructuring. Therefore, the Restructuring is expected to

be transparent to the Licensee’s customers.

IV. Information Required by Section 1.767 of the Commission’s Rules

In support of this Application, the Applicants submit the following information

pursuant to Section 1.767 of the Commission’s Rules:

(1) Name, address and telephone number of Applicants:

The St. Thomas and San Juan Telephone Company, Inc. FRN: 0007719180
7901 Jones Branch Drive, Suite 900
McLean, Virginia 22102
Tel: (703) 902-2800

Primus Telecommunications Group, Incorporated FRN: 0009832866
7901 Jones Branch Drive, Suite 900
McLean, Virginia 22102
Tel: (703) 902-2800

(2) Jurisdiction of Applicants:

The St. Thomas and San Juan Telephone Company, Inc. is organized under the
laws of the U.S. Virgin Islands.
Primus Telecommunications Group, Incorporated is organized under the laws
of Delaware.

(3) Correspondence concerning this Application should be sent to:

Catherine Wang
Danielle Burt
Katie B. Besha
Bingham McCutchen LLP
2020 K Street, NW
Washington, D.C. 20006
(202) 373-6000 (Tel)
(202) 373-6001 (Fax)
catherine.wang@bingham.com
danielle.burt@bingham.com
katie.besha@bingham.com

with copies to:
5
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Legal Department
c/o John DePodesta
Primus Telecommunications, Inc.
7901 Jones Branch Drive, Suite 900
McLean, Virginia 22102
Tel: (703) 902-2800

(4) STSJ Telephone holds an interest in the AMERICAS-I Cable System, FCC File No.
SCL-LIC-19921110-00002.4 A description of this system is on file with the
Commission and is incorporated by reference herein.

STSJ Telephone holds an interest in the AMERICAS-II Cable System, FCC File No.
SCL-LIC-19980101-00036.5 A description of this system is on file with the
Commission and is incorporated by reference herein.

STSJ Telephone holds an interest in the ANTILLAS I Cable System, FCC File No.
SCL-LIC-19951013-00002.6 A description of this system is on file with the
Commission and is incorporated by reference herein.

STSJ Telephone holds an interest in the BAHAMAS II Cable System, FCC File No.
SCL-LIC-19960329-001287 and FCC File No. SCL-LIC-19960329-00130.8 A
description of this system is on file with the Commission and is incorporated by
reference herein.

STSJ Telephone holds an interest in the COLUMBUS II Cable System, FCC File No.
SCL-LIC-19921110-00004.9 A description of this system is on file with the
Commission and is incorporated by reference herein.

STSJ Telephone holds an interest in the COLUMBUS-III Cable System, FCC File No.
SCL-LIC-19980527-00007.10 A description of this system is on file with the
Commission and is incorporated by reference herein.

STSJ Telephone holds an interest in the Pan American Cable System, FCC File No.
SCL-LIC-19970421-00002.11 A description of this system is on file with the
Commission and is incorporated by reference herein.

4
Old File No. SCL-93-002.
5
Old File No. SCL-98-003.
6
Old File No. SCL-95-012.
7
Old File No. SCL-96-003.
8
Old File No. ITC-96-234.
9
Old File No. SCL-93-001.
10
Old File No. SCL-98-005.
11
Old File No. SCL-97-001.
6
A/73062923.1

STSJ Telephone holds an interest in the TAINO-CARIB cable system, FCC File No.
SCL-LIC-19920107-00005.12 A description of this system is on file with the
Commission and is incorporated by reference herein.

(5) A general description of the cable landing locations for the above referenced cable
systems are already on file with the Commission in the original license files and are
thus incorporated by reference herein.

(6) The AMERICAS-I Cable System is operated on a common carrier basis.

The AMERICAS-II Cable System is operated on a common carrier basis.

The ANTILLAS I Cable System is operated on a common carrier basis.

The BAHAMAS II Cable System is operated on a common carrier basis.

The COLUMBUS II Cable System is operated on a common carrier basis.

The COLUMBUS-III Cable System is operated on a common carrier basis.

The Pan-American Cable System is operated on a common carrier basis.

The TAINO-CARIB cable system is operated on a common carrier basis.

(7) As a result of the proposed transaction, STSJ’s ownership interest in the above
referenced cable systems will remain with PTI. The ultimate ownership of PTI, and
thus indirectly PTI’s interest in the above referenced cable systems, will be transferred
to PTGI. The ownership interests other entities hold in the above referenced cable
systems will not change as a result of the proposed transaction.

(8) Certification and Ownership Information Required by Section 63.18(h)-(o) of the
Commission’s Rules:

(h) Pre-restructuring Ownership:

The following entity currently holds ten percent (10%) or more interest STSJ
Overseas Telephone Company, Inc.:

Name: The St. Thomas and San Juan Telephone
Company, Inc.
Address: 7901 Jones Branch Drive, Suite 900
McLean, VA 22102
Citizenship: U.S. Virgin Islands, U.S.
Interest Held: 100%
Principal Business: Telecommunications

12
Old File No. SCL-92-002.
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A/73062923.1

The following entity currently holds ten percent (10%) or more interest in
Least Cost Routing, Inc. and The St. Thomas and San Juan Telephone
Company, Inc.:

Name: Trescom International, Inc.
Address: 7901 Jones Branch Drive, Suite 900
McLean, VA 22102
Citizenship: Florida, U.S.
Interest Held: 100%
Principal Business: Telecommunications

The following entity currently holds ten percent (10%) or more interest in
Primus Telecommunications, Inc. and Trescom International, Inc.:

Name: Primus Telecommunications Holding, Inc.,
Debtor-in-Possession
Address: 7901 Jones Branch Drive, Suite 900
McLean, VA 22102
Citizenship: Delaware, U.S.
Interest Held: 100%
Principal Business: Telecommunications

The following entity currently holds ten percent (10%) or more interest in
Primus Telecommunications Holding, Inc., Debtor-in-Possession:

Name: Primus Telecommunications Group,
Incorporated, Debtor-in-Possession
Address: 7901 Jones Branch Drive, Suite 900
McLean, VA 22102
Citizenship: Delaware, U.S.
Interest Held: 100%
Principal Business: Telecommunications

The following entity currently holds ten percent (10%) or more interest in
Primus Telecommunications Group, Incorporated, Debtor-in-Possession:

Name: American International Group, Inc.
Address: 70 Pine Street
New York, NY 10270
Citizenship: U.S.
Interest Held: 13.12%
Principal Business: Investment

No other person or entity, directly or indirectly, currently owns or controls ten
percent (10%) or more of the Primus Telecommunications Group,
Incorporated, Debtor-in-Possession.

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A/73062923.1

Post-restructuring Ownership:

The following entity will hold ten percent (10%) or more interest in STSJ
Overseas Telephone Company, Inc.:

Name: The St. Thomas and San Juan Telephone
Company, Inc.
Address: 7901 Jones Branch Drive, Suite 900
McLean, VA 22102
Citizenship: U.S. Virgin Islands, U.S.
Interest Held: 100%
Principal Business: Telecommunications

The following entity will hold ten percent (10%) or more interest in Least
Cost Routing, Inc. and The St. Thomas and San Juan Telephone
Company, Inc.:

Name: Trescom International, Inc.
Address: 7901 Jones Branch Drive, Suite 900
McLean, VA 22102
Citizenship: Florida, U.S.
Interest Held: 100%
Principal Business: Telecommunications

The following entity will hold ten percent (10%) or more interest in Primus
Telecommunications, Inc. and Trescom International, Inc.:

Name: Primus Telecommunications Holding, Inc.
Address: 7901 Jones Branch Drive, Suite 900
McLean, VA 22102
Citizenship: Delaware, U.S.
Interest Held: 100%
Principal Business: Telecommunications

The following entity will hold ten percent (10%) or more interest in Primus
Telecommunications Holding, Inc.:

Name: Primus Telecommunications Group, Inc.
Address: 7901 Jones Branch Drive, Suite 900
McLean, VA 22102
Citizenship: Delaware, U.S.
Interest Held: 100%
Principal Business: Telecommunications

Following the Restructuring, no entity is expected to hold more than ten
percent (10%) of Primus Telecommunications Group, Incorporated.

9
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Applicants will not have any interlocking directorates with a foreign carrier.

(i) Applicants certify that they are not foreign carriers, nor are they affiliated with
a foreign carrier, nor will Applicants be affiliated with a foreign carrier as a
result of the Restructuring.

(j) Applicants certify that they do not seek to provide international
telecommunications services to any destination country where:
(1) An Applicant is a foreign carrier in that country; or
(2) An Applicant controls a foreign carrier in that country; or
(3) Any entity that owns more than 25 percent of an Applicant, controls a
foreign carrier in that country; or
(4) Two or more foreign carriers (or parties that control foreign carriers)
own, in the aggregate more than 25 percent of the Applicants and are
parties to, or the beneficiaries of, a contractual relation affecting the
provision or marketing or international basic telecommunications
services in the United States.

(k) Not applicable.

(l) Not applicable.

(m) Not applicable.

(n) Applicants certify that they have not agreed to accept special concessions
directly or indirectly from any foreign carrier with respect to any U.S.
international route where the foreign carrier possesses market power on the
foreign end of the route and will not enter into such agreements in the future.

(o) Applicants certify that they are not subject to denial of federal benefits
pursuant to Section 5301 of the Anti-Drug Abuse Act of 1998. See 21 U.S.C.
§ 853a. See also 47 C.F.R. §§ 1.2001-1.2003.

(p) Applicants respectfully submit that this Application is eligible for streamlined
processing pursuant to Section 63.12(a)-(b) of the Commission’s Rules, 47
C.F.R. §63.12(a)-(b). In particular, Section 63.12(c)(1) is inapplicable because
none of the Applicants are or are affiliated with any foreign carriers and none
of the scenarios outlined in Section 63.12(c) of the Commission’s Rules, 47
C.F.R. § 63.12(c), apply.

(9) Applicants certify that they accept and will abide by the routine conditions set forth in
Section 1.767(g) of the Commission’s Rules, 47 C.F.R. § 1.767(g).

(10) This Application qualifies for streamlined processing under Section 1.767(j) and (k) of
the Commission’s Rules, 47 C.F.R. § 1.767(j) and (k) because PTGI is not a foreign
carrier or affiliated with a foreign carrier in any of the cable’s destination markets.

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A/73062923.1

VI. CONCLUSION

Based on the foregoing, Applicants respectfully submit that the public interest,

convenience, and necessity would be furthered by a grant of this Application.

Respectfully submitted,

By: /s/ Danielle Burt

Catherine Wang
Danielle Burt
Katie B. Besha
Bingham McCutchen LLP
2020 K Street, NW
Washington, D.C. 20006
(202) 373-6000 (Tel)
(202) 373-6001 (Fax)
catherine.wang@bingham.com
danielle.burt@bingham.com
katie.besha@bingham.com

Counsel to Applicants

Dated: June 15, 2009

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VERIFICATION

9115127v3

Document Created: 2009-06-15 18:53:07
Document Modified: 2009-06-15 18:53:07

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