Provo » Veracity Networks has asked the city to hold off on its request to loan the company $1.5 million as part of a restructuring of its payments for the iProvo Network.
The Municipal Council was scheduled to vote Tuesday on the agreement but continued the item for three weeks. Mayor Lewis Billings said the company asked for more time to review details about collateral.
"The devil is in the details," Billings told the council, "and sometimes the devil has a law degree." He said there could be a few more questions as attorneys examine the documents.
The city sold its troubled iProvo network to Broadweave Networks in June 2008.
In August, Broadweave merged with Veracity Communications, an iProvo provider, to form Veracity Networks. Veracity CEO Drew Peterson and Chairman David Moon have asked the city to allow it to restructure its payments to the city so it can save up cash to cover new growth.
Under Broadweave, the company has, since November, drawn on a $6 million surety deposit to make the bond payments while it tried to save operating cash. At that rate, the deposit would have dropped to the point where, by February, Broadweave would be considered in default.
The proposal would have Veracity reduce its $277,000 monthly payment by $82,000 for 18 months, then raise it to $277,000 for two years and pay an extra $25,000 for seven years after that. Since the payments go toward retiring the city's $39.6 million bond for the network, the city would have to take money from the municipal Energy Department's reserves to make up the difference.
Veracity would pay the money back through the extra payments.
When the city ran iProvo, it used $2 million annually in Energy Department funds to subsidize the network. Billings said part of the question the lawyers have is how the loan will be secured. The plan is to have existing Broadweave and Veracity customer accounts considered as collateral, as well as accounts of new customers who sign on. But Veracity's customers who are not hooked up to iProvo's network would not be counted.
Council members had earlier asked to see Veracity's financial statements before it would sign off on the agreement.
Cynthia Dayton, council chairwoman, said she and other council members have seen some of the records.
"We saw as much as was available," Dayton said. "And it was encouraging."
