By Ahmad Hathout
OLDS, AB – The oversight board of O-Net, a prominent community gigabit telecom in Olds, Alberta, is being placed in receivership for failing to pay back a $14 million loan from the town.
The non-profit Olds Institute for Community and Regional Development (OICRD), which oversees for-profit O-Net’s owner, Olds Fibre Ltd., was taken to court in the Court of Queen’s Bench in Alberta on June 25 after many months of trying to get the entities to pay back the fibre infrastructure loan from 2012 and 2014.
Now the town is embarking on a consolidation of all entities involved into a town-controlled corporation. This includes O-Net as well as the Olds Connected Community Network (OCCN) and Mountain View Power, which are both owned by the Olds Institute. Accounting firm BDO Canada Ltd. is expected to take over the operations as receiver, oversee the reorganization, and ensure the debt is paid back.
“Town is of the opinion that the assets of Institute are at risk and that a Receiver Manager must be appointed to maximize realization for the benefit of Institute’s stakeholders,” the town said in court documents. “It is both just and convenient to appoint a Receiver Manager over the assets, property and undertakings of Institute.”
In a June 25 press release, the mayor of the town, Michael Muzychka, said when the town-owned corporation is created, the town council “will then determine the Board of Directors, and the corporation will be governed under the Corporation’s new articles and bylaws which outlines how tasks should be accomplished within the organization, including preparation and management of financial records and process of director appointments.”
The town said it has not directly placed Olds Fibre under receivership to avoid disrupting the business, though it is unclear what the consolidation means for the private company and whether it will eventually become a government-owned company under the new structure.
A request for comment from the mayor’s office was not returned.
In May 2020, the town announced via press release after a town council meeting, that the loan would be reorganized and that it would not seek an immediate call-back on the loan, but would involve legal counsel that effectively put the institute on a timer to pay the debt. That agreement was extended three more times, in October 2020, February 2021 and on April 15, 2021. The last one expired on June 25, the day the town filed the court action to put the institute into receivership.
In the May press release, the town said it would “increase the oversight in the Town’s investment and the operations of Olds Institute including O-Net,” but similarly said O-Net’s services and operations would not be disrupted during the process. “Every effort was made by the Town, for OICRD and OFL to find a solution/investor to see O-NET grow and thrive,” Muzychka said in the June 25 press release.
“We believe that BDO Canada has the knowledge and expertise to take O-NET to the next level as the Receiver as we move forward,” Muzychka said.
The town also announced a public hearing on July 26 to discuss the consolidation matter.
Generally speaking, receiverships often involve the selling of assets or streamlining of operations to make up the money to pay a debt, but it is currently unclear what the negative consequences of such a move will be on the telecom in the long-term. “This decision will not change the services or customer expectations of O-NET, and all staff will be retained to run O-NET,” the town said on June 25.
O-Net, which also provides TV and home phone service, is often synonymous with community fibre success stories, alongside the likes of Chattanooga — also known as the “Gig City” — in Tennessee.
The price for O-Net’s theoretical gigabit download and upload speeds with unlimited data is $125 a month.
Earlier this year, Toronto city council voted to have a city-owned broadband network. The city would effectively build the infrastructure and have telecoms deliver the last mile of service to homes and businesses. The city has said that it hopes to address an affordability gap in Toronto, but critics have said that the major city has many competitive options that do not require another network.
