8. Comments on Draft Decision
The draft decision of the ALJ in this matter was mailed to the parties in accordance with Section 311(g)(1) and Rule 77.7 of the Rules of Practice and Procedure. Comments were filed on __________, and reply comments were filed on ___________.
1. Notice of this application appeared in the Commission's Daily Calendar of September 27, 2000.
2. No protests have been filed.
3. Applicants seek approval pursuant to Pub. Util. Code § 854(a) for the acquisition of the stock of Evans Telephone by Evans Holdings and the transfer of control of Evans Telephone to Evans Holdings and Country Road.
4. Evans Telephone is an incumbent local exchange telephone utility serving approximately 12,000 access lines in portions of Merced, Stanislaus, Santa Clara, and Yolo Counties.
5. Evans Holdings and its parent company Country Road are Delaware corporations that own and operate two small local exchange companies in Maine and West Virginia.
6. The record provides no evidence that the merger will provide benefits to ratepayers of Evans Telephone or the public generally.
7. Country Road's balance sheet as of June 30, 2000, lists $39.7 million in total assets, of which $30.3 million are listed as "Intangibles." These intangible assets represent goodwill associated with the acquisition of two local exchange carriers in other states and start-up expenses for Country Road.
8. Country Road's balance sheet indicates long term debt of $22.5 million and equity of $14.7 million.
9. Country Road's most recent income statement indicates a net loss of $3.3 million for the year ended June 30, 2000.
10. Country Road will finance the Evans Telephone stock acquisition with $38 million in equity and an additional $42 million in debt.
11. Country Road's financial condition does not maintain or improve the financial condition of Evans Telephone and could pose a threat to captive ratepayers of Evans Telephone.
1. The proposed stock acquisition and transfer of control of Evans Telephone to Evans Holdings and Country Road is adverse to the public interest because the financial condition of Evans Telephone is not maintained or improved by the transaction.
2. The application should be denied without prejudice to any future filing showing that the current ratepayers of Evans Telephone would not be adversely affected in the event of financial difficulties for Country Road and showing benefits to Evans Telephone ratepayers from the transaction.
3. This proceeding is designated a ratesetting proceeding; no protests have been received; no hearing is necessary.
IT IS ORDERED that:
1. Application (A.) 00-09-045 is denied.
2. A.00-09-045 is closed.
This order is effective today.
Dated , at San Francisco, California.
