Discussion

Under Section 852, no public utility, and no subsidiary, affiliate of, or corporation holding a controlling interest in, a public utility, shall purchase or acquire, take or hold, any part of the capital stock of any other public utility, organized or existing under the laws of this state, without prior Commission authorization. Section 854 further requires Commission authorization before a company may "merge, acquire, or control . . . any public utility organized and doing business in this state . . . .". The purpose of these and related sections is to enable the Commission, before any transfer of a public utility is consummated, to review the situation and to take such action, as a condition of the transfer, as the public interest may require. (San Jose Water Co. (1916) 10 CRC 56.)

In a situation in which a company that does not possess a CPCN desires to acquire control of a company that does possess a CPCN, we will apply the same requirements as in the case of an applicant seeking a CPCN to exercise the type of authority held by the company being acquired. Therefore, although Gores does not hold a CPCN to provide telecommunications services in California, Gores must meet the requirements for issuance of a CPCN because it is acquiring control of Global.

The Commission has established two major criteria for determining whether a CPCN should be granted. An applicant who desires to operate as a facilities-based and resale provider of local exchange and interexchange service must demonstrate that it has a minimum of $100,000 in cash or cash equivalent, reasonably liquid and readily available to meet the firm's start-up costs. In addition, the applicant is required to make a reasonable showing of technical expertise in telecommunications or a related business. The application includes financial statements and other evidence that demonstrates that Gores has sufficient resources to meet our financial requirements. Since Global is expected to continue to operate under the same day-to-day management, we find that our general requirement for technical expertise is satisfied, for the purposes of this transaction only.⁴ The transaction will improve Global's access to capital and credit, which should improve Global's financial position and ability to serve customers in this state. In addition, this transaction will be transparent to customers. Therefore, the proposed transaction is in the public interest.

Therefore, we will grant the application pursuant to Sections 852 and 854.

However, we note several problems related to this application. First, although the application represents that VoiceCom has or has applied for operating authority in every state, Commission records indicate that VoiceCom does not have and has not applied for a CPCN in California, at least under this corporate name.⁵ Under Rule 1,⁶ both counsel and parties filing applications with the Commission are obligated to ensure that statements in the application are correct and are not misleading.

In addition, under Section 2.4(c) of the stock purchase agreement between Gores and Schlumberger, upon the closing of the transaction, Schlumberger is entitled to withdraw all cash held by Global, except for funds needed to cover outstanding checks issued by Global before the closing. In order to ensure that Global has sufficient funds to operate as a telecommunications provider in this state, we will require Gores to amend Section 2.4(c) to provide that at all times Global shall retain funds in at least the minimum amount required to qualify to meet requirements for its CPCN. Gores may file the revised agreement or amendment with the Commission Telecommunications Division by advice letter no later than 45 days after the effective date of this decision.