The town will receive about $3.5 million of the initial proceeds from the sale of Niagara Regional Broadband Network to a subsidiary of cable giant Cogeco Communications.
The sale of the broadband network to Cogeco Connexion was completed on Feb. 5, but a final purchase price won’t be determined until closing financials for the network are finalized.
This will occur when interest-bearing notes, currently paying eight per cent, come due in December 2026 (the date by which payment is required).
The town announced it would be selling the Niagara Regional Broadband Network in early February.
“We’ve managed to get a great return for the town,” said Tim Curtis, president of Niagara-on-the-Lake Hydro, a partner with the town in Energy Services Niagara Inc., which represents Niagara-on-the-Lake’s stake in the broadband network.
The town, through Energy Services Niagara, held a minority stake — 25 per cent — in the internet, telephone and television provider company since it was formed in 2004 to fill the region’s need for broadband services.
As a result, the energy group will receive 25 per cent of the proceeds of the sale.
The other 75 per cent will go to the hydro holding commission for the City of Niagara Falls, the majority stakeholder in the broadband network business.
An information report detailing the purchase agreement is scheduled to come before council at its April 9 committee of the whole meeting.
Energy Services Niagara has received $8.56 million from the sale since it was completed in February.
In addition to the town funds, $2.7 million of the proceeds will be used to pay down a debt incurred through the purchase of a stake in the broadband network held by the City of Port Colborne and the Town of Grimsby.
Approximately $1 million will be set aside for income taxes and the remaining $1.3 million will be earmarked for investments.
Council passed a resolution last July that approved the money for Energy Services Niagara.
Curtis said the estimated value of the notes is $4.3 million, which will go to the eneregy services group when they come due.
It’s not known how that money will be used, he said.
“That’s for (Energy Services Niagara) to invest,” Curtis said. “That’s part of my job.”
Lord Mayor Gary Zalepa, meanwhile, said the return to the town as the result of the sale was because of “the “excellent people (on the board)” representing the community.
“The investment made paid off,” he said. “The sale to Cogeco achieved a good result for the town.”
For now, Energy Services Niagara will continue to hold a minority stake in the company and will have one seat on the board until the note comes due.
Niagara Falls will have three members on the board with Cogeco occupying four seats.
As a part of the sale, the town has signed a standard non-compete agreement, meaning it will not enter a similar business for the next five years.
Cogeco, meanwhile, pledged to continue to make investments in broadband services across Niagara.
