FECI Sells EPIK to Odyssey

Florida East Coast Industries completes sale of its EPIK Communications subsidiary to Odyssey Telecorp

December 4, 2002

2 Min Read

ST. AUGUSTINE, Fla. -- Florida East Coast Industries, Inc. (NYSE: FLA, FLA.b) (FECI) announced today it has completed the sale of its wholly owned telecommunications subsidiary, EPIK Communications Incorporated (EPIK), to Odyssey Telecorp, Inc. (Odyssey), a privately held holding company specializing in telecom network assets. FECI had previously announced its decision to exit the telecommunications business.The consideration included a cash payment of $500,000, a potential earnout payment of up to $30 million based on EPIK’s future performance, and a warrant to acquire 15% of the outstanding stock of Odyssey. In addition, FECI will provide Odyssey with up to $17 million for Odyssey’s use in connection with EPIK, which FECI intends to treat as a transaction expense. FECI expects to account for the sale of EPIK and its operations as a discontinued operation. FECI wrote down the entire book value of EPIK’s long-lived assets at September 30, 2002, resulting in a carrying value for EPIK of negative $37 million. Consequently, FECI will record a modest accounting gain on the sale even though it does not anticipate assigning a material carrying value to the earnout or the warrants. Additionally, FECI expects to claim a cash income tax refund of approximately $72 million on its 2002 Federal tax return and to carry forward the benefit of Federal tax losses of approximately $80 million, as a result of the sale of EPIK. However, there can be no guarantee that, or when, the expected tax refund will be received. Robert W. Anestis, Chairman and CEO of FECI stated: “Going forward, FECI will focus all of its resources on its two core operating businesses, Florida East Coast Railway, L.L.C. and Flagler Development Company, both of which generate significant earnings and cash flows for the Company. In addition, we will continue to unlock the value of our non-core real estate assets with the goal of creating additional shareholder value. We are pleased to have completed the sale of EPIK and thank EPIK’s executive team, led by E. Craig Sanders and Carlos L. Rojas, for managing through this process. We wish Odyssey well in its plan to continue to build and support EPIK and its customers.”EPIK Communications Inc.

Subscribe and receive the latest news from the industry.
Join 62,000+ members. Yes it's completely free.

You May Also Like