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.
SUBMISSION OF FINANCIAL INFORMATION
14. This Commission has determined that detailed financial review of transactions involving competitive, non-dominant carriers is not required:
"The Commission has previously determined that regulations intended to apply to monopoly utilities may be relaxed when a company operates in a competitive environment. Therefore, we shall grant petitioners' request to waive Pm1s 3 7 and 3 9 of the Commission's Rules. The financial and other information called for in Pm1s 37 and 39 are oflittle value in the competitive sector where the financial status of the players is of little, if any, interest to the Commission in discharging its regulatory responsibilities."
See Case 92-C-1218, Petition ofTeleport Communications Group, et al. for Authority to Issue and Acguire Shares, and to Issue Evidences oflndebtedness, Order Approving Petition, issued and effective April 13, 1993. See also Case 90-C-0166, Petition of Alltel Corporation for a
Declaratory Ruling that the Commission Lacks Jurisdiction Over the Proposed Change of its
State oflncorooration or, in the Alternative for Approval of the Proposed Transaction,
Declaratory Ruling, issued and effective April 23, 1990.
15. Accordingly, this Commission is able to review all of the transactions described herein without the need for further review of the parties' financial statements.
REQUEST FOR EXPEDITED REVIEW
16. Due to rapidly changing market conditions, and the need to assure the availability of financing for these transactions on favorable te1ms, Applicants seek to close these transactions promptly. A prompt closing will have the further benefit of eliminating any
6 unce1iainty on the part of existing or future customers, and advance the ability of Block to expand its network and offer new services, with the attendant enhancement of competition in the marketplace, and stimulus to the economy of this state.
17. Accordingly, Applicants respectfully ask the Commission to approve this
Application, and the authority sought herein, at its first opportunity.2
WHEREFORE, Applicants respectfully urge the Commission to issue an Order at its first opportunity as follows:
1. Authorizing Block Line Systems,LLC, to acquire all of the Certificates of
Public Convenience and Necessity, and all telephone and other assets of Line Systems, Inc. and
Magellan Hill Technologies, LLC;
2. Authorizing transfer of the Line Systems, Inc. and Magellan Hill
Technologies, LLC customer base, contracts, and accounts to Block Line Systems, LLC, upon compliance with all applicable FCC customer transfer rules;
3. Authorizing Block Line Systems, LLC to issue long te1m debt of up to $50
Million, in the fmm of guaranties of the debt of Block Communications, Inc., at interest rates, maturities, terms and conditions as may be required by the financing entities and market conditions, including pledging the stock and assets of Block Line Systems, LLC as security for such guaranties.
4. To the extent necessary, approving the assignment of the existing
Interconnection Agreements between Verizon New York and Line Systems, Inc. and Magellan
Hill Technologies, LLC to Block Line Systems, Inc.; and
2 An Application is being filed contemporaneously with the FCC for authority to effectuate these transactions. It is expected that the FCC Application will be eligible for streamlined processing, which absent any intervening events, will result in receipt of FCC approval thi1iy one days after going on Public Notice.
7 5. Granting to Applicants such other consents, approvals, and authority as may be required to consummate the transactions described herein.
Dated: July 16, 2014 Albany, New York
Petitioner ock Line Systems, LLC By: Keith J. Roland Its Attorney Herzog Law Firm P.C. 7 Southwoods Blvd. Albany, NY 12211 Tel: (518) 465-7581Extension185 Fax: (518) 462-2743 e-mail [email protected]
Petitioners Magellan · Technologie , L and Line Systems, Inc. By: Steven A. Augustino Denise N. Smith Kelley Drye & Warren, LLP 3050 K Street, NW Washington, D.C. 20007 Tel: (202) 342-8612 Fax: (202) 342-8451 e-mail: [email protected] [email protected]
8 EXHIBIT A Doc ID--> 201416300527
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DATE DOCUME.Nl 10 DESCRIPTION FILING EXPED PENAi.. TY CERT COPY OOl12/2014 201416300527 ARTICLES OF ORGNZTNIDOM. PROFIT 125.00 0.00 0.00 0.00 0.00 LIM.LIAS. CO. (LCP}
Receipt This is not a bill. Please do not remil payment.
SHUMAKER LOOP & KENDRICK. LLP ATTN: JENNA FELLER 1000 JACKSON ST. TOLEDO, OH 43604
ST ATE OF OHIO CERTIFICATE Ohio Secretary of State, Jon Husted 2302772
It is hereby certified that the Secretary of Stale of Ohio has custody of the business reoords for DLOCK LINE SYSTEMS, LLC
an Witness my hand and the seal of the Secretary of State at Columbus, Ohio this 12th doy ofJuno, A.D. 2014. Uniled Stales of America Slate of Ohio Office of the ~cretary of Stale Ohio Secretary of State Page1 Doc ID··> 201416300527 Form 533A Prescribed by: Mall lhls fo1m lo one of tho lo!lowlng: Ohio secretary of state Re~111 flln9 (non expedile) JoNffUSTBD P.O. Box870 Ohio Secretary of Stale Co!Umbue, OH 43218 Central Ohio: (614) 466·3910 EMpeC!Ke Fllilg (Two-111.i&lne.as dil'/ proctHlnQ Umo requfn11 ;in lddlUon1J $100.00). ToU Free: (877) SOS-FILE (767·3453) P.O. Box 1390 !VMV. Oh/oSecre11uyo/Stlll1'.g011 CO!umout,OHO:Z16 B~OhfoSJ;cfs/atyolstsl~ gw Articles of Organization for a Domestic Limited Liability Company Fiiing Fee: $125 CHECK ONLY ONE (1) BOX (1) I!] Ar1Jcles of Organization for Domes lie (2) D Articles of Organization for DomesUo For-Profit UmHed llablllty Company Nonprollt Limited LlablRly Company {115-LCA) (116-LCA) fl: ~ Name of Limited Llabllity Company Lls_1oc_k_L~l·"~"~S~y-•l_•_m_c•·c..L_L_c______-;@;:'· __ ==1 Name must lndl.lde ooa or the~ word~ or abbrev!iBons; "Lblllecl llablllly c:cit'f'llWIY," ik'rlfleQ,"LLC," "L.LC(?. '!Id., "ut)Rd" ·~ ~ x ( Effective Dale (The legal existence ol lhe lhnl!ed llabUily company begins upon th~Ung ~ ~' (Optlon1l) L______J of the arUcles or on a later dale speclned lhal Is nol more lhan nlnefN-days N ·~ · mrn/ddlyyyy efter fil!ng) -· This limlled llabl~ty company shall exist for (Optronsl) Period ot Elds!ence Purpon1 (Op!lonal) uNole for Nonprofit LLCs The Secrelary or State does not grant tax exernpl alatus. Filing with our office is no! sufficient lo oblaln slate or federal tax exemptions. Conlee! Iha Ohio Department of Taxation end the ln!emal Revenue Service to ensure thal the nonpront limlted liabDl\y C form 533A Page 1 of3 Lasl Revised: 511412014 Page 2 Do.c ID--> 201416300527 ORIGINAL APPOINTMENT OF AGENT The undersigned aulhorfa:ed mamber(s), manager(s) or represenlaUve{s) of Block Line Systems, LLC Name of Llmlled Uabltlly Company hereby eppolnl /he following la bo Statutory Agent upon whom eny process, noUc"e or demand requlnid or perm/lied by statute lo be served upon the limlled Jlablllty company may lie setved. The npme and address of the agent Is Phn~p H. Lea Name of Agent 11000 Jackson Street M<'llllng Addre!>s Toledo Ohio Clly Slate 21P Code ACCEPTANCE OF APPOINTMENT The underolgned, LIP_h_Hlcclp.:H_:._L_ee'---~~~~-~------' named herein as Iha statulory egenl Stalutory Agent Name for jB_Jcick Line ~sl_ems_, LLC Name al limited Uabllity Company hereby acknowledges end ac.cepls the eppolnlmenl ot egenl for said ltmlted l!ab!llty company Slalulory Agent Slgnalure I (j2l./~ ~.....tf lndMdua1A9t1l·a Signature I Signature on Behalf or Buslne5B Serving as Agent form 533A Page2~13 Les! Revised: 6/1412014 Page 3 Doc ID··> 201416300527 By signing and submllllng this form lo the Ohio SecrelaTY of Stele, lhe undersigned hereby cerUfles that he or she hes Ula requisite authority to execule this document Required ArUc!ea and orlglnal appointment of agenl musl I (Jl¢k be signed by a member, Signature. manager or olher represenlallva. II authorized represenlatlve By (If appllcable) Is an lndlvlduel, then they musl sign In lhe "slgnelure" box and pr1nl theJr name IPhlrlp H. Lee, Authorized Represenlative rn the "Pfint Name• box. Print Name If authorized represenlalive Is a business entity, nol an lndivldual, then please print Iha business name In the "slgnalure~ box, an Signature eulhorlze Print Name Slgnah.sra By (If eppllcabla) Prlnl Name Fann 633A Page 3 of3 LS$I Revised: 5/1412014 Page4 STATE OF NEW YORK DEPARTMENT OF STATE I hereby certify that the annexed copy has been compared with the original document in the custody of the Secretary of State and that the same is a true copy of said original. WITNESS my hand and official seal of the· Departinent of State, at the City of Albany, on July 3, 2014. Anthony Giardina Executive Deputy Secretary of State Rev. 06/13 CT-07 APPLICATION FOR AUTHORITY OF Block Une Syslems, LLC Under Section 802 of the Limited Liability Company Law FIRST: The name of the llmit~d liability company is: Block Uno Systems, LLC J If the name does not contain a required word or abbreviation pursuant to Section 204 of the Limited Liability Company Law, the following word or abbreviation is added to the name for use In this state: If the name of the limited liability company Is unavailable, the flctlUous name under which it will do business In New York Is: SECOND: The jurisdiction of organization of the limited liability company Is: Ohio The dale of Its organization ls: _Ju_n_e_11_._20_1_4_.------ THIRD: The county within this state In which the office, or If more than one·offlce, the principal office of the limited llablllty company Is to be located. Is; New York FQURTH: The secretary of state ls designated as agent of the limited llablllty · company upon whom process against it may be served. The post office address within this state to which the secretary of state shall mall a copy of any process against him or her Is: c/o CT Corporation System, 111 Eighth Avenue, New York, New York 10011. FIFTH: The name and street address within this state of the registered agent of the limited liability company upon whom and at which process against the limited liability company can be served Is: C T Corporation System, 111 Eighth Avenue, New York, New York 10011. . SIXTH: The address of the office required to be maintained In the jurisdiction of formation by the laws of that jurisdiction or, If not so required, the address of the prinClpal office of the limited llablllty 'company Is: 405 Madison Avenue, Suite 2100 Toledo, Ohio 43604 · SEVENTH: The limited. liability company Is In existence in Its jurisdlcUon of formation at the time of the filing of ihls application. 140702000323 EIGHTH: ( Complete the applicable statement) The name and address of the authorized officer In the jurisdiction of formation where a c;opyofthe articles of organization of the limited liability compa.ny Is flied Is (e.g. Secretary of State): Ohio Secretarv of State. 180 East Broad Street Columbus. OH 432iS D No public-filing of the limited liability company's arUcles of organization Is required by the laws of the jurisdlctlon of formation. The limited liability , company shall provide, upon request, a copy thereof with all amendments thereof. The name and post office address of the person responsible for providing such copies Is: ~ame an~pac(y of Signer Jodl L. Miehls, authorized person ·' UNITED STATES OF AMERICA STATE OF OHIO OFFICE OF THE SECRETARY OF STATE L Jon Husted, do hereby certifY that I am the duly elected, qualified and present acting Secretary of State for the State of Ohio, and as such have cu.Ytody of the records of Ohio and Foreign business entities; that said records show BLOCK LINE SYSTEMS, LLC, an Ohio For Profit Limited Liability Company, Registration Number 2302772, -was organized within the ·state of Ohio on June 11, 2014, is c:Urrently in FULL FORCE AND EFFECT upon the records of this office.· Witness iny hand and the seal of the Secretqry ofState at Columbus, Ohio this I st day ofJuly, A.D. 2014. Ohio Secretary of State Validation Number: 201418201173 0 ' I '(, CT-07 Cl 8------LLI ...... _,I ...N Application for Authority LL. ·-.....;;;; of Block Line Systems, LLC (Entity Name) Under Section 802 of the Limited Liability Company Law ---·------I e c STATE OF NEW YORK. DEPARTMENT OF STATE Fl~ED JUL 0 2 2014 TAXS - Filed by: . LA f Shumaker, Loop & Kendrick, LLP SY=------., (Name) 1000 Jackson Slreet (Mal/Ing addre.is) . Toledo, Ohio 43604 (City, State and ZIP code) DRAWDOVJN CDrrefti 91q1tf8Zr{J 33 ti Entity Information Page I of I NYS Department of State Division of Corporations Entity Information The infonnation contained in this database is current through July 7, 2014. Sel.ected Entity Name: BLOCK LINE SYSTEMS, LLC Selecte_d Entity Status Information Current Entity Name: BLOCK LINE SYSTEMS, LLC DOS ID#: 4601018 Initial DOS Filing Date: JULY 02, 2014 County: NEW YORK Jurisdiction: OHIO Entity Type: FOREIGN LIMITED LIABILITY COllllPANY Current Entity Status: ACTIVE .-.... Selected Entity Address Information DOS Process (Address to which DOS will mail process if accepted on behnlf of the entity) CIO CT CORPORATION SYSTEM 111 EIGHTH A VENUE NEW YORK, NEW YORK, !0011 Registered Agent CT CORPORATION SYSTEM 111 EIGHTH A VENUE NEW YORK, NEW YORK, !0011 This office does not require or maintain information regarding the names and addresses of members or managers of nonprofessional limited liability companies. Professional limited liability companies must include the name(s) and address( es) of the original members, however this information is not recorded and only available by vic\ving the cerlificale. *Stock Information #of Shares Type of Stock $Value per Share No Information Available *Stock information is applicable to domestic business corporations. Name History Filing Date Name Type Entity Name JUL 02, 2014 Actual BLOCK LINE SYSTEMS, LLC A Fictitious name must be used when the Actual nmne of a foreign entity is unavailable for use in Ne\v York State. The entity must use the fictitious name when conducting its activities or business in Ne\Y York State. NOTE: New York State does not issue organizational identification numbers . .search Results Ne\v Search Services/Programs I Privacv Policv .1 Accessibility Policy Disclai1ncr I Return to DOS Homepage I Contact lJs http://appext20.dos.ny.gov/corp_public/CORPSEARCH.ENTITY _ INFORMA TION?p _nameid=4680812&p _ corpid=4601018&p_en... 7/8/14