V. The Transaction

Pursuant to the stock purchase agreement, Holdings issued $40 million of Series D preferred stock. THL, ITPC, and TEL were the primary purchasers, and they now collectively own a majority of Holdings' voting stock-46.3%, 11.6%, and 16.3%, respectively.⁴ Investcorp's (and, therefore, SIPCO's) equity interests in these three companies are not sufficient to provide it with control over Holdings. However, through a combination of Investcorp's equity interests and management arrangements with other investors, Investcorp (and, ultimately, SIPCO) has the ability to exercise de facto control over Holdings and TelePacific. Although SIPCO's indirect control, through Investcorp, of THL, ITPC, and TEL places it in a position to control Holdings and TelePacific, the ability to vote Holdings' stock currently is restricted to preclude SIPCO from exercising such control until approvals from this Commission and other state and federal regulatory agencies are obtained. Similarly, the ability of THL, ITPC, and TEL to designate one director on the board is precluded prior to obtaining regulatory approvals.

Where acquiring companies do not possess CPCNs, we apply the same requirements as an applicant seeking a CPCN to exercise the type of authority held by the company being acquired, a minimum of $100,000 in cash or cash equivalent, and technical expertise in telecommunications or a related business. Existing investors Investcorp and SIPCO gain the ability to exercise control over Holdings and TelePacific through arrangements with other investors plus the increased investment. Because we have not previously reviewed SIPCO's compliance with our financial and technical requirements, we do so now.

Joint Applicants make the requisite financial showing through Investcorp.⁵ The financial statements provided demonstrate that Investcorp is profitable and has available funds far in excess of the minimum $100,000. Following approval of the change in control, TelePacific will continue to be managed and operated by the individuals who currently manage and operate the company. The proposed transaction will have no impact on the day-to-day operations of TelePacific. However, Investcorp has substantial investments in the telecommunications and technology sector and has the technical expertise we require. Joint Applicants further confirm that to the best of SIPCO's knowledge no affiliate, officer, director, partner or owner of more than 10% of SIPCO has been sanctioned by the Federal Communications Commission or any state regulatory commission, has filed for bankruptcy or has been found criminally or civilly liable or is under investigation for consumer misrepresentation.

No new construction is being proposed. Accordingly, there is no possibility that the proposed transaction contemplated herein may have any significant impact on the environment.