BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA FILED 12/21/20 In the Matter of the Joint Application of 04:59 PM A2012013 LINGO TELECOM OF THE WEST, LLC (U-7118-C) and MATRIX TELECOM, LLC (U-5227-C), Licensees and A.20- - LINGO COMMUNICATIONS, LLC, Transferor and B. RILEY PRINCIPAL INVESTMENTS, LLC, Transferee For Expedited Approval to Transfer Indirect Control of Lingo Telecom of the West, LLC and Matrix Telecom, LLC Pursuant to California Public Utilities Code Section 854(a) JOINT APPLICATION FOR EXPEDITED APPROVAL TO TRANSFER INDIRECT CONTROL OF LINGO TELECOM OF THE WEST, LLC AND MATRIX TELECOM, LLC PURSUANT TO CALIFORNIA PUBLIC UTILITIES CODE SECTION 854(A) (PUBLIC VERSION) (Exhibits G and I are CONFIDENTIAL) Bennett L. Ross Chérie R. Kiser Daniel Brooks Angela F. Collins WILEY REIN LLP Joseph Cho (CA Bar # 320044) 1776 K Street, N.W. CAHILL GORDON & REINDEL LLP Washington, D.C. 20006 1990 K Street, N.W., Suite 950 Tel: 202-719-7524 Washington, DC 20006 Fax: 202-719-7049 Tel: 202-862-8900 [email protected] Fax: 212-269-5420 [email protected] [email protected] [email protected] Counsel for Transferee Counsel for Transferor and Licensees Dated: December 21, 2020 1 / 65 BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA In the Matter of the Joint Application of LINGO TELECOM OF THE WEST, LLC (U-7118-C) and MATRIX TELECOM, LLC (U-5227-C), Licensees and A.20- - LINGO COMMUNICATIONS, LLC, Transferor and B. RILEY PRINCIPAL INVESTMENTS, LLC, Transferee For Expedited Approval to Transfer Indirect Control of Lingo Telecom of the West, LLC and Matrix Telecom, LLC Pursuant to California Public Utilities Code Section 854(a) JOINT APPLICATION FOR EXPEDITED APPROVAL TO TRANSFER INDIRECT CONTROL OF LINGO TELECOM OF THE WEST, LLC AND MATRIX TELECOM, LLC PURSUANT TO CALIFORNIA PUBLIC UTILITIES CODE SECTION 854(A) Pursuant to Section 854(a) of the California Public Utilities Code, Lingo Communications, LLC (“Transferor”) and B. Riley Principal Investments, LLC (“Transferee”) respectfully request authority from the California Public Utilities Commission (“Commission”) to transfer control of Lingo Telecom of the West, LLC (U-7118-C) (“Lingo West”) and Matrix Telecom, LLC (U-5227-C) (“Matrix”) (Lingo West and Matrix collectively, the “Licensees”) from Transferor to Transferee (the “Transaction”) (Transferor, Licensees, and Transferee collectively, “Applicants”). 2 / 65 For the reasons set forth herein, Applicants submit that approval of this Joint Application is in the public interest. Consummation of the proposed Transaction will serve the public interest by providing additional managerial expertise and access to financial resources to Licensees, which will in turn enhance their ability to offer services and better compete in the telecommunications marketplace. The proposed Transaction will occur at the parent level and will only result in a change in the indirect ownership of Licensees. No assignment of licenses, assets, or customers will occur as a consequence of the proposed Transaction. The proposed Transaction also will not trigger a change in the rates, terms, and conditions under which Licensees provide service to their existing customers. Accordingly, this Transaction will be, for all practical purposes, imperceptible to customers. The proposed Transaction also will not adversely affect competition in California because it will not result in a reduction of competitors and customers will continue to have access to the same competitive alternatives that they have today. Applicants also submit that the Commission should grant the Joint Application on an expedited basis. Licensees are facing financial challenges, which the proposed Transaction would help ameliorate by providing Licensees with access to capital and lowering Licensees’ borrowing costs. Licensees previously sought to achieve these benefits through a different transaction – a transaction for which the parties sought approval from the Commission in December 2019 but subsequently abandoned in November 2020 after it had been pending before the Commission for nearly a year (Docket No. 19-12-012). Applicants recognize the significant demands facing the Commission, particularly in the midst of a pandemic. But the communications sector is highly dynamic and robustly competitive, and significant delay in securing the Commission’s approval of the Joint Application will harm Licensees and prejudice 3 3 / 65 Applicants. Under the circumstances, Applicants respectfully request that the Commission consider this Joint Application no later than a Voting Meeting scheduled for April 2021. I. DESCRIPTION OF THE APPLICANTS AND CHARACTER OF BUSINESS (Rules 2.1(a), 2.2, and 3.6(a)) A. Lingo Communications, LLC (Transferor) Lingo Communications, LLC (“Lingo”) is a Georgia limited liability company, with a principal office at Prominence in Buckhead, 3475 Piedmont Road NE, 12th Floor, Suite 1260, Atlanta, GA 30305. Lingo is a wholly owned, direct subsidiary of GG Telecom Investors, LLC (“GG Telecom”), a Georgia limited liability company. GG Telecom is owned by Holcombe T. Green, Jr. (62.5%) and R. Kirby Godsey (37.5%). Lingo is a holding company and does not provide telecommunications services or hold any Commission authorizations. A copy of Lingo’s organizing documents is provided in Exhibit B. Lingo is not required to qualify to transact business in the State of California because it does not have operations in the State at this time. Lingo controls Licensees through Lingo Management, LLC (“Lingo Management”). Lingo Management is a Delaware limited liability company, with a principal office at Prominence in Buckhead, 3475 Piedmont Road NE, 12th Floor, Suite 1260, Atlanta, GA 30305. Lingo Management is a holding company and does not provide any telecommunications services or hold any Commission authorizations. Lingo holds a majority of the voting interests of Lingo Management. A copy of Lingo Management’s organizing documents is provided in Exhibit C. Lingo Management is not required to qualify to transact business in the State of California because it does not have operations in the State at this time. B. Lingo Telecom of the West, LLC (U-7118-C) Matrix Telecom, LLC (U-5227-C) Lingo West, a Delaware limited liability company, is an indirect wholly owned subsidiary of Lingo and a direct subsidiary of Lingo Management. In California, Lingo West is 4 4 / 65 authorized to provide resold and limited facilities-based local exchange and interexchange services pursuant to Decision (“D.”) 09-06-013. Lingo West also holds authority from the Federal Communications Commission (“FCC”) to provide domestic interstate and international telecommunications services,1 and is authorized to provide telecommunications services in Alaska, Hawaii, and Nevada. Other subsidiaries of Lingo Management are authorized to provide telecommunications services in the District of Columbia and all other states. Copies of Lingo West’s organizing documents and its qualification to transact business in California are provided in Exhibit D. Matrix, a Texas limited liability company, is an indirect wholly owned subsidiary of Lingo and Lingo Management. In California, Matrix is authorized to provide resold interexchange services pursuant to D.90-10-062 and resold local exchange telecommunications services pursuant to D.05-03-023, which was expanded to include the provision of limited facilities-based telecommunications services by D.07-06-043. Matrix also holds authority from the FCC to provide domestic interstate and international telecommunications services,2 and is authorized to provide telecommunications services in all other states and the District of Columbia (a separate subsidiary of Matrix provides services in Virginia). Copies of Matrix’s organizing documents and its qualification to transact business in California are provided in Exhibit E. 1 Lingo West provides international telecommunications services pursuant to the international Section 214 authorization held by Lingo Management under IB File No. ITC-214-20160630-00180, and provides interstate telecommunications services pursuant to blanket domestic Section 214 authority. 47 C.F.R. § 63.01. 2 Matrix provides international telecommunications services pursuant to international Section 214 authorizations held under IB File Nos. ITC-214-19900713-00004 (Old File No. ITC-90-152), ITC-214-19930330- 00053 (Old File No. ITC-93-145), ITC-214-19940830-00266 (Old File No. 94-478), ITC-214-19970415-00212 (Old File No. ITC-97-227), ITC-214-19980507-00300 (Old File No. ITC-98-349), and ITC-214-19980915-00644. Matrix provides interstate telecommunications services pursuant to blanket domestic Section 214 authority. 47 C.F.R. § 63.01. 5 5 / 65 On July 10, 2020, Matrix submitted Advice Letter No. 80 advising the Commission of a proposed internal reorganization that will result in the transfer of customers from Lingo West to Matrix (the “Internal Customer Transfer”). The Internal Customer Transfer is unrelated to the proposed transfer of indirect control of Licensees to Transferee that is the subject of this Joint Application. The Internal Customer Transfer is part of an effort by Lingo Management to streamline its corporate structure and consolidate the nationwide operations of its operating subsidiaries (including Licensees) into a single operating entity. Matrix currently serves customers using the Lingo brand, including on invoices, and will adopt or incorporate the terms and conditions and rates from the Lingo West tariffs. Therefore, the Internal