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Lockheed Martin to Buy Burlington Telecom for $65 Million 

Published April 1, 2011 at 9:28 a.m.

* update *

At a news conference scheduled for later today, Mayor Bob Kiss and Lockheed Martin CEO Stephan James will announce that the global weapons maker has offered $65 million to become owners and operators of Burlington Telecom, the city utility that is more than $50 million in debt.

“BT has tremendous potential,” said James, according to a prepared press release leaked to Seven Days. “It’s a fair price, and we intend to pursue completion of BT's buildout in the city and then seek state approval to deploy this system to other towns in Chittenden County and across the state.”

Lockheed Martin learned of BT after it began working with the city on ways to combat climate change.

The cash purchase will repay the $17 million owed taxpayers, $33.5 million owed to CitiCapital, set aside another $15 million to complete the buildout of the network within the city — including upgrades to the existing video network offerings — and provide more robust, free Wi-Fi throughout the Queen City.

Lockheed Martin will also guarantee the city a portion of the telecom's excess profits that will fluctuate from year to year based on a complex financial structure that only hedge-fund managers seem to understand. That, and rating agencies such as Moody's and Fitch.

The sale would see BT renamed Burlington Lockheed Telecom, or BLT. Talk about bringing home the bacon.

Mayor Kiss noted, “Like me, Lockheed Martin believes in the value of competitive services to provide the best and least-cost alternative to consumers. They will take BT and compete with Comcast, FairPoint, VermontTel and anyone else who wants to be in the telecommunications business in Vermont. This is a great victory for Vermont consumers who will save millions of dollars over the years due to the competitive nature of private enterprise."

FairPoint's Vermont state president Michael Smith, a former Navy Seal, said, "Bring it on. They want a war, they've got one. We're ready for a bitter byte battle."

Comcast officials couldn't be reached for comment, but the firm launched a new website: ComcastforPeace, with 1 percent of sales to be donated to antiwar causes.

Kiss said Lockheed was chosen after using his favorite form of selection: instant runoff voting. Lockheed's bid was vying against Virgin and Entergy. Had Virgin bought BT, it would have renamed it Virgin Telecom (VT) and Entergy would have renamed the utility Burlington Yankee Telecom (BYTe). Kiss declined to release the results of the IRV process or the value of the other bids. But he did say Lockheed won on the third round.

As part of the deal, Lockheed Martin plans to bring its line of children's educational TV shows exclusively to BLT, such as: "Where in the War Is Waldo?" and "The F-35 Goes Zoom!" along with a pay-per-view channel of Lockheed products in action on the battlefield.

Lockheed Martin’s chief executive, who flew in from Houston earlier in the day for the announcement, also said the fiber-to-the-home concept in Burlington would be a linchpin for the company’s energy-efficiency partnership with the city.

“We’ll be offering a load of free services and energy-use-monitoring to each residence and business in the city — which will include two-way video conferencing and 24-hour surveillance, I mean, monitoring," said James.

Kiss is expected to present a preliminary purchase-and-sale agreement to an emergency City Board of Finance meeting tonight and further outline the proposal in his State of the City address on Monday.

Kiss also said that the proceeds of the deal should be used to reduce property taxes for residents and businesses for the forseeable future.

City Council president Bill Keogh (D-Ward 5) said the deal was a “complete surprise” to him, but, he added, “It was a good surprise.” Keogh noted, “I’m sure the council will have a lot of questions when they look at the details of the agreement at our next meeting, which we hope to hold in open session. At least I think it will. I'll check with [City Attorney] Ken Schatz and get back to you on that.”

Councilors Joan Shannon (D-Ward 5) and Karen Paul (I-Ward 6) said the council wouldn't necessarily rubber-stamp the proposal. They said it may be worthwhile to set up a blue-ribbon study commission to ensure this is the best deal the city could get on the fair market.

City Councilor Ed Adrian, a notorious bombthrower, said he would want to make sure that Lockheed representatives, and their attorneys, would be at the next meeting.

"I see plenty of landmines in this proposal," said Adrian. "I, for one, have at least three legal pads' worth of questions. The administratiion has 600 full-time employees to vet these $65 million deals; we just have our $3000 stipends to fall back on."

City Councilor Kurt Wright (R-Ward 4), who is thinking of running for mayor next year, said, "All along, I've thought we should wait it out and make sure the city gets the best deal. But money isn't the only issue, it's trust — and can we trust a corporation that even a member of the mayor's own party says has cheated the federal government?"

Wright is referring to Sen. Bernie Sanders, who called out Lockheed Martin for being one of the more egregious government contractors who received "bazillions of dollars" while at the same time being charged with defrauding the feds.

The two remaining Progressives on the council were unavailable for comment. Seven Days has learned they are sitting through a six-hour dramatic reenactment and interpretive dance piece of the climate-change agreement between Lockheed Martin and the city of Burlington at an undisclosed Old North End performance space. The performance involves a mock Darth Vader, the scarecrow from The Wizard of Oz and an emerging opposition affinity group, Hipsters Against Lockheed Telecom (HALT).

The proposed purchase of BT by LM is also inspiring local punk band the Wards to remake their famous single, "Weapon Factory." This time around, the track will be titled "Weapon Telecom."

* update *

The Burlington Telecom Advisory Committee has endorsed the sale of BT to Lockheed. The committee posted this statement today, along with updated subscriber package info, and a new marketing slogan: "Burlington Telecom. Switch. Now. We're Watching."

In case the sale falls through, I've pasted below the complete statement and subscriber info:

"The Burlington Telecom Advisory Committee (BTAC) supports the sale of Burlington Telecom to Lockheed Martin.  We have had preliminary meetings with the new management team LM has put in place, and have made several suggestions, some of which will begin immediately. These include:   Every current BT subscriber will receive a free Javelin Every new BT Subscriber will receive a free Marlin Al Jazeera will be replaced by FOX Areospace Research Television VCAM will be replaced by an interactive version of GeoEye-2 RETN will be replaced by RSSI CCTV will now feature Closed Circuit Television that features footage from Lockheed Martin aerial reconnaissance flights over Burlington Burlington Telecom, along with its subscribers, is now in an authoritative position to increase its share of the Burlington market. While we believe doing so by force won't be necessary, we now have that option, which will help reinforce our new marketing campaign. Burlington Telecom. Switch. Now. We're Watching."

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Shay Totten

Shay Totten

Shay Totten wrote "Fair Game," a weekly political column, from April 2008-December 2011.

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