VarTec seeks OK of bidding procedures, stalking horse bidder for asset sale

By Caroline Salls

Pittsburgh, June 17 - VarTec Telecom, Inc. is seeking court approval of the bidding procedures and its choice of Leucadia National Corp. as stalking horse bidder for its $61.5 million sale of all its remaining assets, according to a Friday filing with the U.S. Bankruptcy Court for the Northern District of Texas.

Leucadia, or the high bidder if it is not Leucadia, will be required to pay a $7.5 million deposit to be placed in an escrow account.

According to the agreement, the sale will be a three-step process.

First, VarTec and the buyer will enter into a management services agreement, under which the buyer will agree to operate VarTec's acquired assets pending closing of the sale.

Second, after the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, VarTec will transfer all acquired assets for which Federal Communications Commission consents are unnecessary. At that time, VarTec will receive 50% of the purchase price.

Finally, after FCC consents are obtained, those assets will be transferred and VarTec will receive the remainder of the purchase price.

The first bid other than Leucadia's must be at least $2.5 million more than Leucadia's bid and each successive bid must be at least $100,000 more than the previous bid.

If Leucadia is not the high bidder, VarTec will pay a termination fee of 3% of the purchase price.

VarTec requested a hearing on the bidding procedures be held June 27.

The auction will be held July 25, and the sale hearing will be held July 26 or July 27.

VarTec, a Dallas-based telecommunications provider, filed for bankruptcy on Nov. 1, 2004. Its Chapter 11 case number is 04-81694.

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