Discussion

Under § 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 where 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. Although Buyer does not directly hold a CPCN, ICG Telecom has a CPCN to operate as a local exchange and interexchange carrier. We therefore apply the requirements for such authority to Buyer.

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. This latter condition has been satisfied as detailed in our prior discussion of the parties to the transaction and addressed in the application.

Buyer, a newly formed holding company, has no historical financial statements and will not have any significant operations prior to the consummation of the transaction. However, the investment companies supporting Buyer have substantial financial resources. M/C Venture manages over $1 billion in assets and is currently investing in M/C Venture Partners V, a $550 million venture capital fund raised in 2000 from institutional investors including the Nation's largest state and corporate pension funds, prominent university endowments and private trusts, as well as financial institutions. Columbia Capital's most recent private equity fund raised $856 million in 2000 and the company currently has approximately $1.4 billion under management.

Buyer's financial qualifications are further evidenced by the demonstrable financial commitment to the proposed transaction. Specifically, M/C Venture and Columbia Capital have agreed to loan $2.4 million to ICG through a credit facility, to escrow $6.35 million to finance the proposed transaction, and committed to advance more than $15 million to Buyer to be used to fund ongoing operations through completion of the proposed transaction. Copies of the wire transfer of funds, proof of escrow funding, and commitment letters demonstrating the financial commitments are filed under seal as Exhibits C, D, E, F, and G. Buyer has provided evidence that demonstrates that it has sufficient resources to meet our financial requirements.

Buyer submitted the above financial material under seal because these documents are non-public financial documents and the information, if disclosed, could place Buyer at a competitive disadvantage. All information placed under seal should remain sealed for a period of two years from the date of this order, and during that period should not be made accessible or disclosed to anyone other than Commission staff except on the execution of a mutually acceptable protective order.

For the following reasons, we conclude that it is reasonable to grant this § 854 application. First, ICG Telecom will continue to operate as it has in the past, using the same name and authority. Second, the public may benefit from the indirect transfer of control to the extent the transaction enhances the ability of ICG Telecom to maintain and expand its services and operations in California. Third, there is no opposition to this application. For these reasons, we see no reason to withhold authority for the transfer of control before us here. The proposed transaction is in the public interest.

We grant the application pursuant to §§ 852 and 854.