Small wireless carrier Mobilicity could be sold or recapitalized

TORONTO – Mobilicity is starting a restructuring process that could see the sale or recapitalization of the small, debt-laden wireless network company.

Mobilicity says debtholders will be asked to approve both a plan to sell the company and a recapitalization plan at a meeting on May 21.

The company says if a buyer cannot be found it will go ahead with the recapitalization plan.

Under the recapitalization plan, the share capital of Data & Audio-Visual Enterprise Holdings Inc. — Mobilicity’s legal name — would be reorganized, certain debt would be repaid and Mobilicity would get funds to continue operating.

There have been reports that Telus (TSX:T) has been in talks with Mobilicity to buy the small carrier, which launched its service three years ago in May 2010.

Mobilicity offers no-contract cellphone service in Toronto, Ottawa, Calgary, Edmonton and Vancouver and was one of a new generation of wireless carrier that emerged to challenge Canada’s three main wireless companies.