Primus in creditor protection as it completes sale to U.S. bidder
Company that offered home phone, long-distance says consumers lured away by mobile, telecom bundles
Primus, a phone, long-distance and internet reseller with more than 225,000 Canadian customers, is in creditor protection as it negotiates sale of its assets to a U.S. telecom firm.
Primus has been seeking a buyer since August as debt mounted and it became unable to pay its bills.
On Tuesday it was granted creditor protection, saying it needed time to restructure and complete negotiations to sell its assets to Birch Communications Inc., based in Atlanta.
Primus is to continue operating as usual while it restructures. It has until Feb. 18 to complete the deal.
In court filings, it said consumers are shifting to cheaper mobile plans and faster internet, eating into its legacy business. The major carriers are also able to offer more attractive bundles of phone, internet and TV, luring away some of its customers.
The company offers home phone, long-distance phone, VoiP2, calling cards and internet services, but doesn't operate its own networks, buying bulk service from other carriers such as Bell, Allstream and Telus.
It has 204,000 residential accounts and 23,000 commercial accounts in Canada, mainly in Ontario, and 27,000 in the U.S. and Puerto Rico. For home phone service, it is one of the few alternatives to Bell and Telus.
Primus said in its court filings that it has $101 million in debts and its revenue has been declining nine per cent a year since 2012.
But it has high fixed overhead costs, primarily from purchasing service from other carriers.
The company said its gross revenue decreased from $229 million in the fiscal year ended 2012 to $199 million in 2013 to $180 million in 2014.
For 2015, revenue is forecast to fall to $116 million and the company expects a net loss of $13 million.
The court filings do not say whether it plans to cut staff or cease operations in markets where it does not have a large subscriber base.
Primus employs 502 people in Canada and 28 in the U.S.