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Sale of Bruce Telecom was a difficult decision for Kincardine council, says mayor

Letter to the Editor

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Dear Editor:

I want to take this opportunity to respond to comments in the media, saying Kincardine council needs to be transparent about the sale of Bruce Telecom to Eastlink.

Let me begin by saying that the decision to sell Bruce Telecom was not an easy one for anyone on council, in particular given its over 100-year history in the community.

There were a few factors behind this decision. The municipality was faced with needing to invest a significant amount of money in Bruce Telecom to continue to compete with the major telecom companies that benefit from greater scale, or look to divest the company and invest the money in our municipality.

In addition, it was determined that going forward there was significant risk to the sustainability of the income from Bruce Telecom which the municipality has seen decline over the years. In fact, distributions declined from $1.5-million to $800,000 over the past five years with some risk of further declines.

In terms of the sale process, there is no question we would have welcomed the opportunity to discuss the process publicly. However, in sales like these, it is customary to conduct the bidding processes on a confidential basis, subject to non-disclosure agreements. This process allowed the municipality to maintain control of the process and avoid eroding the sale value and, thereby, maximizing our return.

Essentially, had a public process taken place to determine whether or not to sell Bruce Telecom, the value of the utility would have been decreased as competitors would take advantage of the prospect of a sale in the market to win customers, and prospective buyers would bid low as they would assume the municipality had to sell.

The confidential process delivered maximum value to the municipality as the bidders knew if the appropriate price was not achieved, the municipality would simply retain Bruce Telecom. This is why councilís discussion and voting on the sale took place in camera, in accordance with applicable municipal law.

 

Bruce Telecom has collective agreements with the Canadian Union of Public Employees that cover most of our employees, that will be honoured by Eastlink. The applicable labour legislation states that a purchaser of a business is bound by any collective agreement that applies on the date of the sale. 

This was a difficult but necessary decision for everyone on council. As members of the council of the Municipality of Kincardine, we take our commitment to our taxpayers, customers, residents and businesses seriously, and we made this decision to protect the value we had built over the past 100 years.

Larry Kraemer,
Mayor,
Municipality of Kincardine



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