Friday, January 17, 2020

Continuum sale update from Tuesday's Davidson Board Meeting

On Monday, aShortChronicle reported on the update expected at this week's Board of Commissioners meeting.  In that earlier post information indicated the dollar amount cleared for Davidson may be smaller than many expected due to some previously undisclosed (or at least undetailed) post sale expenses.  The update Tuesday shed little light on that.

However, here is where the numbers land as of now.

After paying off the outstanding debt, the deferred liability to Mooresville, and the known transaction costs, Davidson's portion of the net proceeds from the sale equals just over $2.5 million dollars.  There is $2.75 million in two different escrow accounts to cover any post sale items that pop up.  This includes:
  • $750,000 in operations contingency to cover Bill's that my need to be covered by the Towns within the next 90 days.  
  • $2 million indemnification escrow
If the escrow money is not used, that money eventually would be split between Mooresville and Davidson based on the 70%/30% ownership.  If zero of it is used, an unlikely scenario, it would bring Davidson's likely highest dollar amount from the sale to $3.325 million.

There was a very brief mention of the other possible costs mentioned in Monday's post.  These are
 still being addressed involving claims by Cornelius, Mecklenburg County, and the State Retirement Plan.  Specific dollar amounts were not mentioned, but obviously if any of these need to be covered they will eat into the net amount on the transaction.  It is the understanding here at aShortChronicle that these costs are not directly related to the sale of the company to TDS, but related to agreements that created Mi-Connection in the first place more than a decade ago that may need to be met if the company was sold.

Aside from these things, Mi-Connection/Continuum cost Mooresville and Davidson taxpayers a net loss overall since 2007 is estimated to be between $31m - $39m over the life of the project.

See the whole presentation here under the first agenda item.

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