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GST’s auction
excludes most
Hawaii assets

Time Warner Telecom is
paying $690 million in the deal

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By Rob Perez
Star-Bulletin

GST Telecommunications Inc. said today it has agreed to sell substantially all its assets to Time Warner Telecom Inc. for $690 million, but the proposed deal includes only a "very, very small portion" of GST's Hawaii assets.

GST spokesman Kira Higgs said the company still is evaluating what to do with the remaining Hawaii assets.

Neither GST nor Time Warner would say what Hawaii assets are included in the tentative deal between the two companies. In a joint statement, the companies said the $690 million cash and debt deal excludes a substantial majority of GST's Hawaii assets.

Among GST's assets here is a fiber-optic network linking Oahu to the neighbor islands. That is not believed to be part of the Time Warner deal, although analysts had said that network would have been a major benefit to Time Warner's Oahu affiliate, Oceanic Communications. With its own fiber-optic network on Oahu, Oceanic provides telecom services to businesses and government agencies on the island.

Vancouver, Wash.-based GST is selling its assets as part of its Chapter 11 reorganization bankruptcy. The firm held an auction this week to sell the assets.

This is the second time in the past several months that GST and Time Warner have reached agreement on a tentative deal, but the first one included the Hawaii assets. That deal fell apart when Littleton, Colo.-based Time Warner could not reach favorable terms on a final agreement with GST and its creditors. The deal still is subject to the two companies reaching a definitive agreement and gaining bankruptcy court approval, among other things.

Bob Meldrum, a Time Warner Telecom spokesman, said the Hawaii assets it would get as part of the pending deal would "best complement" what the company already has in the local market. He wouldn't elaborate.

Analysts have said GST's Hawaii assets, which includes an online operation, are expected to reap about $75 million.

MBN Communications Inc., a privately held Maui company, previously had reached agreement to purchase GST's Hawaii assets for $76 million. But that deal fell apart earlier this year before GST decided to pursue an auction.

An MBN spokesman could not be reached for comment today, but the company has said it submitted a bid for GST's Hawaii assets.

GST executive Pat Bustamante said his firm is adding telecom capacity in the Hawaii market and plans to add new services. GST Hawaii has about 55 employees.