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EC Fiber
Chooses
A Bank

ECFiber, which hopes to create a super-speed fiber-optics network of Internet, telephone, and cable services in 23 towns in Central Vermont, is one step closer to that goal, the organization said last week.

A New York investment bank has agreed to contract with the consortium of towns to raise the $85 million needed to build the system.

The agreement was announced at Tuesday's meeting of the ECFiber Governing Board by Loredo Sola, chair of the executive committee.

ECFiber’s full name is East Central Vermont Community Fiber Network, and it includes most all the towns in the White River Valley, along with a scattering of others, including Montpelier.

Previously, ECFiber had obtained agreement from all 23 towns, via Town Meeting votes and selectboard resolutions, to work together. In many of the towns, residents have signed up to be put on the list for ECFiber service, which officials say will be both much faster and cheaper than commercially available broadband, including the broadband that FairPoint Communications is now expanding within the area.

Early sign-ups will make the plan more attractive to investors, suggesting that a revenue stream would start to flow promptly after installation of the infrastructure.

The $85-million construction plan would make fiber-optic lines available to every home in the 23 towns that currently has at least phone service, ECFiber said.

The money raised by the bank would come from private investors who would be paid back by revenue from customers.

Sola explained that Oppenheimer will broker a non-recourse capital lease in the form of Certificates of Participation (COPs). He said Oppenheimer was selected from three qualified bidders because of its experience with COPs for fiber-to-the-home projects, their understanding of the project and a proven track record.

Apart from a nominal initial signing fee, Oppenheimer has agreed to make all fees and out-of-pocket costs contingent on the success of the financing, he said.

Project Director Tim Nulty, formerly of Burlington Telecom, was enthusiastic.

"This is a very big deal," He said. "Oppenheimer is risking a lot of money to put this together. If it doesn’t come through, they get nothing but the signing fee. You can be sure that they would not enter into such an agreement if they were not very confident that they can complete the financing."

As a first step, he said, Oppenheimer will do "due diligence" to be sure that all of the participating towns are on solid financial and legal footing. To that end, ECFiber has retained Greenberg Traurig, a Boston law firm, to help the 23 towns provide Oppenheimer with the information it requires.

The "working target date" for closing is currently Oct. 30, but Nulty cautioned that "realistically, I will be delighted if the money is in the bank by the end of the year."

ECFiber hopes to break ground in late spring and begin connecting customers in October 2009.