State regulators, after approving the highly leveraged, 2005 sale of Hawaiian Telcom, said they plan to take a more critical eye to the pending sale of the state’s largest phone company.

Jerrold Guben, attorney for the state Public Utilities Commission, said any reorganization plan should expect a "full vetting" by the PUC and that mistakes made during the 2005 approval process “will not be repeated.”

Guben said the PUC role will be three-fold: It will make comments on the reorganization plan's disclosure statements, will participate in confirmation hearings for reorganization plans and will hold its own hearings once the company emerges from bankruptcy.

“They better come up with something better than the 2005 case,” Guben said.
“We intend to take three bites from the apple.”

The 2005 sale of the local phone company to Washington, D.C.-based The Carlyle Group for $1.65 billion tripled the company’s debt load, contributing to its Dec. 2008 bankruptcy filing.

Critics have argued that Carlyle, an investment firm, did not have the expertise to run a telephone company, which ran into massive billing problems and the loss of customers to wireless providers and other competitors.

Hawaiian Telcom is pursuing a stand-alone, $460 million reorganization that sharply reduces the company’s debt but doesn’t provide a lot of details on how it will finance investments in its infrastructure to keep it competitive.

Rural phone company Sandwich Isle Communications Inc. is pursuing a competing $400 million reorganization plan that relies heavily on federal government financing.

Tags: bankruptcy, Hawaii Public Utilities Commission, Hawaiian Telcom, the Carlyle Group

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