Herzog LAW FIRM
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HERzog LAW FIRM July 16, 2014 ELECTRONIC FILING Hon. Kathleen H. Burgess Secretary New York State Public Service Commission Three Empire State Plaza Albany, New York 12223 Re; Joint Application of Block Line Systems, LLC; Magellan Hill Technologies, LLC; and Line Systems, Inc. for Authority to Transfer and Acquire Ce1iificates, Assets, and Customer Base, and for Authority to Issue Long Tenn Debt Dear Secretary Burgess; Enclosed please find for filing with the Commission the Joint Application of Block Line Systems, LLC; Magellan Hill Technologies, LLC; and Line Systems, Inc. for authority to transfer and acquire Certificates of Public Convenience and Necessity, assets, and customer base, and for authority to issue long term debt. Through the transactions described in the Application, for which authority is sought, Block Line Systems, LLC, will acquire the assets of Line Systems, Inc. and Magellan Hill Technologies, LLC. As part of the transactions, Block Line Systems, LLC, will guarantee debt to be issued by its parent in connection with the transactions. In order to take advantage of rapidly changing market conditions, and the need to assure the availability of financing for these transactions on favorable terms, the applicants respectfully ask the Commission to approve this Application, and the authority sought herein, at its first oppmiunity. · Please address all questions to the undersigned. KJR:tlm Enclosures cc; Tom Moorman, Esq. (by e-mail) Steve Augustina, Esq. (by e-mail) Denise N. Smith, Esq. (by e-mail) Phillip H. Lee, Esq. (by e-mail) James A. Overcash, Esq. (by e-mail) Brian Rex (by e-mail) Herzog Law Firm P.C. v 518. 465. 7581 7 Southwoods Boulevard F 518. 462. 2743 Albany, NY 12211 \vww.herzoglaw.coin STATE OF NEW YORK PUBLIC SERVICE COMMISSION Joint Application of Block Line Systems, LLC; ) Magellan Hill Technologies, LLC; and Line Systems, Inc. for ) Authority to Transfer and Acquire· ) Certificates of Public Convenience and Necessity, Telephone ) Case Assets, and Customer Base, and Authority to Issue ) Long Term Debt ) TO THE COMMISSION: Block Line Systems, LLC (Block); Magellan Hill Technologies, LLC (Magellan); and Line Systems, Inc. (Line Systems), (collectively, "Applicants") respectfully petition the New York Public Service Commission ("Commission"), pursuant to Sections 99 and 10 I of the Public Service Law, (a) for the authority for Block to acquire all of the Certificates of Public Convenience and Necessity, and telephone and other assets, including the customer base, of Line Systems and Magellan and (b) for authority for Block to issue long term debt in the form of guaranties of debt incmTed by its parent. In support thereof, it is respectfully shown as follows: 1. Block is a newly formed Ohio limited liability company, with a principal address of 405 Madison Avenue, Suite 2100, Toledo, Ohio, 43604. Its Alticles of Organization and Registration with the New York Secretary of State are attached as Exhibit A. 2. Block's Federal EIN is 47-1214416. 3. Block is a wholly-owned subsidiary of Block Communications, Inc. (BCI). BCI is a 112 year old privately held diversified media holding company headquaitered in Toledo, Ohio. BCI has primary operations in cable television, broadcast television, telecom infrastructure construction, newspaper publishing, high-speed internet and telephone services. Its prope1ties include: Cablevision Buckeye Cablevision, Inc., Toledo, OH Erie County Cablevision, Inc., Sandusky, OH (both identified as Buckeye CableSystem for marketing purposes) Newspapers The Blade of Toledo Pittsburgh (PA) Post-Gazette Telephone Buckeye Telesystem, Inc., Toledo, OH Broadcast Television WLIO-TV, Lima, OH WDR8-TV, Louisville, KY WFTE-TV, Salem, IN WAND-TV, Champaign/Springfield/Decautor, IL KTRV-TV, Boise, ID Construction Metro Fiber & Cable Construction Co., Toledo, OH 2 Combined, these companies reach hundreds of thousands of people each day. BCI companies employ nearly 3,000 persons nationwide. It has an experienced management team focused on improving the competitive position of its media properties. 4. Buckeye TeleSystem, Inc. in Toledo provides local and long distance phone services, ethernet/networking, internet, cloud, and data services. 5. Line Systems is a Pennsylvania corporation, which provides telephone services as a non-dominant Competitive Local Exchange Carrier (CLEC) in New York. Line Systems was issued a Certificate of Public Convenience and Necessity by this Commission to operate as a reseller of all forms of telephone service within this state on June 5, 2000, in Case OO-C-0448. It was granted an additional Certificate of Public Convenience and Necessity to operate as a facilities-based common canier and reseller, with authority to provide local exchange services (local dial-tone), but without authority to provide emergency operator services, on August 18, 2000, in Case OO-C-0448. Its original intrastate tariff was approved on September 25, 2000. 6. Line Systems currently provides local exchange services to approximately eighty-six (86)customers in New York and toll services to approximately one hundred and ten (110) customers in New York. 7. Magellan is a New Jersey Limited Liability Company which provides telephone services as a non-dominant Competitive Local Exchange Carrier (CLEC) in New York. It was issued a Certificate of Public Convenience and Necessity by this Commission to operate as a reseller and facilities-based provider of all forms of telephone service within this 3 state on April 18, 2006, in Case 06-C-0419. Magellan is a wholly-owned subsidiary of Line Systems. 1 8. Magellan currently provides local exchange services to approximately twenty- one (21) customers in New York and toll services to approximately twenty-five (25) customers in New York. 9. Pursuant to an Asset Purchase Agreement ("AP A") entered into between Block, BCI, Magellan, and Line Systems (and one other non-New York operating Line Systems affiliate), Block will, upon 1·eceipt of all regulatory approvals, purchase all of the telephone and related assets, including customer base, of Line Systems and Magellan. By this Application Block requests the Commission transfer the Certificates of Public Convenience and Necessity of Line Systems and Magellan, discussed above, to Block. Block will request that Verizon New York consent to assignment to Block of any existing Interconnection Agreements with Line Systems or Magellan, or, alternatively, concur in Verizon PSC #8 Interconnection tariff. 10. Line Systems currently has several tariffs filed and effective with this Commission, including Tariff No. 3 for Interexchange Services; Tariff No. 2 for Local Exchange Services; and a new schedule PSC Tariff No. 5 for Access Services. Magellan has on file with this Commission Tariff PSC No. 2 for Access Services and PSC No. 3 for Local and Toll services. Each of these tariffs will be adopted by Block following completion of the asset transfer. Rates for existing customer services will not initially be changed, and any existing 1 Pursuant to Commission Order dated December 15, 2011, all of the Membership Interests of Magellan were acquired by Line Systems. See Case 1 l-C-0622, Joint Application of Line Systems, hie., Magellan Technologies, Inc. and Magellan Hill Technologies, LLC for Approval of a Transfer of Control of an Authorized Telecommunications Provider, Memorandum from the Office of Telecommunications to the Commission, November 17, 2011, Filed Session of December 15, 2011, Approved as Recommended and So Ordered, Issued and Effective December 15, 2011. 4 customer contracts will be honored according to their terms. As such, with the exception of a new service provider name·; the transaction will be virtually transparent to, and thus anticipated to have no immediate effect on, existing customers. 11. As required by applicable Federal Communications Commission ("FCC") Rules, 47 CFR Section 64.l 120(e)(3), and this Commission's procedures, Line Systems' and Magellan's customers will be notified in wTiting of their proposed transfer to Block. Under the FCC Rules, this written notification will be provided to affected customers at least 30 days in advance of the proposed transfer. Compliance with the FCC' s customer transfer rules will satisfy the requirements of Public Service Law Section 92-e(2). See Case 06-C-0281, Petition of Time Warner ResCom of New York LLC, Memorandum from the Office of Telecommunications to the Commission, April 6, 2006, filed Session of May 17, 2006, Approved as Recommended and So Ordered by the Commission, May 18, 2006. 12. The purchase of the assets of Line Systems and Magellan will result in the availability of new and technologically advanced telephone services for Line Systems' and Magellan's customers. The extensive financial, technical, and managerial resources ofBCI will be available to Block in its ownership and management of the Line Systems' and Magellan's assets, and to supp01t the services provided to Line Systems' and Magellan's customers. These added resources will serve as a catalyst for the expansion and enhancement of regulated and non regulated services being made available to existing and future Line Systems and Magellan customers. As such, the public interest will be advanced by Commission approval of the transactions described herein. 5 13. In connection with financing the transaction, BCI, the parent of Block, will incur long term debt of up to $50 Million, which will be guaranteed by Block, with the guaranty secured by the stock and assets of Block.