*Pages 1--4 from  Microsoft Word - 13232.doc*
 PUBLIC  NOTICE  Federal  Communications  Commission  445  12  th  Street,  S.  W.  Washington,  D.  C.  20554  News  Media  Information  202  /  418-  0500  Fax-  On-  Demand  202  /  418-  2830  TTY  202  /  418-  2555  Internet:  http://  www.  fcc.  gov 
 ftp.  fcc.  gov 
 DA  01-  2814 
 Released:  December  3,  2001 

 COMMISSION  SEEKS  COMMENT  ON  APPLICATION  FILED  BY  NEVD  HOLDINGS, 
 LLC  (  NEVD),  FOR  TRANSFER  OF  CONTROL  TO  CONVERSENT  HOLDINGS,  INC. 

 PLEADING  CYCLE  ESTABLISHED 
 CC  Docket  No.  01-  314 

 On  October  18,  2001,  NEVD  Holdings,  LLC  (  NEVD),  and  M/  C  Venture  Partners  V, 
 L.  P.  (  M/  C  V)  filed  an  application  requesting  authority  pursuant  to  section  214  of  the 
 Communications  Act  of  1934,  as  amended  (  the  Act),  47  U.  S.  C.    214,  and  Section  63.01  of  the 
 Commissions  Rules  to  complete  a  transfer  of  corporate  control.  1  On  November  5,  2001,  NEVD, 
 together  with  M/  C  V,  M/  C  Venture  Investors  LLC  and  Chestnut  Venture  Partners,  L.  P. 
 (collectively,  the  Investors),  filed  an  amended  application.  2  Under  the  terms  of  the  proposed 
 transaction,  as  amended,  NEVD  would  undergo  a  corporate  reorganization  by  contributing  the 
 ownership  of  its  operating  subsidiaries  to  a  newly-  created  entity,  Conversent  Holdings,  Inc. 
 (  Conversent).  Once  completed,  the  Investors  would  make  an  equity  investment  in  Conversent 
 in  exchange  for  approximately  35  percent  of  the  voting  power  of  Conversent  on  a  fully-  diluted 
 basis.  With  this  equity  ownership,  the  Investors  would  have  the  right  to  nominate  two  directors 
 to  Conversents  five-  member  Board  of  Directors.  NEVD  would  have  the  right  to  appoint  the 
 remaining  three  directors,  one  of  whom  will  be  subject  to  Investors  approval,  which  approval 
 may  not  be  unreasonably  withheld.  As  part  of  this  transaction,  the  Investors  would  obtain  certain 
 approval  rights  over  a  variety  of  corporate  matters,  including  Conversents  annual  budget  and  any 

 1  See  Application  for  Authority  under  Section  214  of  the  Communications  Act  of  1934,  as  amended,  for  pro 
 forma  Transfer  of  Control  of  a  Common  Carrier  Providing  Domestic  Interstate  Service,  CC  Docket  No.  01-  314 
 (filed  October18,  2001)  (NEVD  Application). 

 2  See  Amended  Application  for  Authority  under  Section  214  of  the  Communications  Act  of  1934,  as 

 amended,  for  a  transfer  of  Control  of  a  Common  Carrier  Providing  Domestic  Interstate  Service,  CC  Docket  No. 
 01-  314  (filed  November  5,  2001)  (Amended  Application). 
1
 2 
 changes  to  senior  management.  Finally,  beginning  four  years  after  the  consummation  of  the 
 transaction,  Investors  will,  at  specified  times,  have  the  right  to  exercise  voting  control  over  the 
 Board  of  Directors  so  as  to  enable  the  Investors  to  effectuate  a  sale  of  Conversent  if  Conversent 
 has  not  theretofore  been  sold. 

 NEVD  is  a  Rhode  Island  limited  liability  company.  It  is  the  holding  company  for  a  number 
 of  direct  and  indirect  subsidiaries  that  provide  a  variety  of  communications  services,  including 
 local  exchange,  long  distance,  international,  and  data  services  to  customers  in  the  Mid-  Atlantic 
 and  New  England  regions.  Conversent  will  be  formed  as  a  Delaware  corporation.  It  currently 
 does  not  have  any  subsidiaries,  and  does  not  provide  any  telecommunications  services. 

 The  Investors  are  a  group  of  related  private  equity  firms.  The  general  partner  of  M/  C  V  is 
 M/  C  VP  V  LLC.  The  managers  of  M/  C  VP  V  LLC  are  James  F.  Wade,  Peter  H.  O.  Claudy, 
 David  D.  Croll,  and  Matthew  J.  Rubins.  The  general  partner  of  Chestnut  Venture  Partners,  L.  P. 
 is  Chestnut  Street  Partners,  Inc.  David  D.  Croll  is  president  and  100  percent  shareholder  of 
 Chestnut  Street  Partners,  Inc.  The  managers  of  M/  C  Investors  Venture  LLC  are  James  F.  Wade, 
 Peter  H.  O.  Claudy,  and  David  D.  Croll. 

 NEVD  and  the  Investors  propose  to  effectuate  a  two-  step  transaction.  In  step  one, 
 NEVD  would  convert  to  a  corporation  by  contributing  the  ownership  of  its  subsidiaries  to 
 Conversent.  In  exchange,  NEVD  would  receive  capital  stock  in  Conversent.  Therefore,  the 
 ultimate  ownership  and  control  of  NEVDs  current  direct  and  indirect  subsidiaries  would  remain 
 unchanged  as  a  result  of  step  one  of  the  proposed  transactions. 

 Conversent  would  issue  new  preferred  stock  to  the  Investors.  Following  this  investment 
 and  on  a  fully-  diluted  basis,  voting  equity  of  Conversent  would  be  held  as  follows:  NEVD, 
 approximately  50  percent  (the  exact  percentage  will  be  slightly  in  excess  of  50  percent);  the 
 Investors,  approximately  35  percent;  and  various  individuals,  including  managers  and  employees 
 of  the  Conversent  entities,  approximately  15  percent. 

 Various  operating  subsidiaries  of  NEVD  are  authorized  to  provide  domestic  interstate 
 services  pursuant  to  Section  63.01  of  the  Commissions  Rules,  47  C.  F.  R.    63.01.  3  NEVDs 
 operating  subsidiaries  currently  provide  local  exchange,  long  distance,  international,  and  data 
 services  to  customers  in  the  Mid-  Atlantic  and  New  England  region.  4  NEVD  and  the  Investors 
 assert  that  the  proposed  transaction  will  serve  the  public  interest,  convenience,  and  necessity 
 because  the  proposed  transaction  involves  no  change  in  the  entity  providing  service  to  customers 
 nor  does  it  propose  any  change  to  the  terms  and  conditions  of  such  service.  5 

 3  Id.  at  2. 
 4  Id.  at  3.  Applicants  have  filed  a  separate  application  with  the  International  Bureau  pursuant  to  Rule 
 63.18(  e)(  3)  to  transfer  control  of  international  section  214  authorizations  held  by  NEVD  subsidiaries. 
 5  Id.  at  4. 
2
 3 
 DOMESTIC  SECTION  214  APPLICATION 
 Part  63    Domestic  Service  (47  C.  F.  R.    63.01) 
 NEVD  Holdings,  LLC  and  M/  C  Venture  Partners  V,  L.  P.,  request  authorization 
 for  transfer  of  control. 

 GENERAL  INFORMATION 
 The  transfer  of  control  request  identified  herein  has  been  found,  upon  initial  review,  to  be 
 acceptable  for  filing.  The  Commission  reserves  the  right  to  return  any  transfer  of  control 
 application  if,  upon  further  examination,  it  is  determined  to  be  defective  and  not  in  conformance 
 with  the  Commissions  rules  and  policies.  Interested  parties  may  file  petitions  to  deny  within  30 
 days  following  the  release  of  this  Public  Notice.  6  Final  action  will  not  be  taken  on  the  applications 
 earlier  than  31  days  following  the  date  of  this  Public  Notice.  7 

 All  filings  concerning  any  or  all  matters  in  this  Public  Notice  should  refer  to  CC  Docket 
 No.  01-  314.  An  original  and  4  copies  of  all  pleadings,  in  accordance  with  Section  1.51(  c)  of  the 
 Commissions  rules,  47  C.  F.  R.    1.  51(  c),  must  be  filed  with  the  Commissions  Secretary,  Magalie 
 Roman  Salas,  445  12  th  Street,  S.  W.,  TW-  B204,  Washington,  D.  C.  20554.  In  addition,  one  copy 
 of  each  pleading  must  be  delivered  to  each  of  the  following:  (1)  Qualex  International,  Portals  II, 
 445  12th  Street,  S.  W.,  Room  CY-  B402,  Washington,  D.  C.,  20554,  telephone  (202)  863-  2893, 
 facsimile  (202)  863-  2898;  (2)  Janice  Myles,  Common  Carrier  Bureau,  445  12  th  Street,  S.  W.,  5-B145, 
 Washington,  D.  C.  20554;  (3)  Nandan  Joshi,  Office  of  General  Counsel,  445  12  th  Street, 
 S.  W.,  8-  A820,  Washington,  D.  C.  20554;  (4)  William  Dever,  Common  Carrier  Bureau,  445  12 
 Street,  S.  W.,  5-  C266,  Washington,  D.  C.  20554. 

 In  addition  to  filing  paper  pleadings,  parties  may  also  file  pleadings  using  the 
 Commissions  Electronic  Comment  Filing  System  (ECFS).  See  Electronic  Filing  of  Documents  in 
 Rulemaking  Proceedings,  63  Fed.  Reg.  24,121  (1998).  Pleadings  filed  through  the  ECFS  can  be 
 sent  as  an  electronic  file  via  the  Internet  to  http://  www.  fcc.  gov/  e-  file/  ecfs.  html.  Generally, 
 one  copy  of  an  electronic  submission  must  be  filed.  If  multiple  docket  or  rulemaking  numbers 

 6  See,  e.  g.,  47  C.  F.  R.    63.52(  c). 
 7  See  47  C.  F.  R.    63.52(  b). 
3
 4 
 appear  in  the  caption  of  this  proceeding,  however,  filers  must  transmit  one  electronic  copy  of  the 
 pleading  to  each  docket  or  rulemaking  number.  Parties  may  also  submit  an  electronic  pleading  by 
 Internet  e-  mail.  To  obtain  filing  instructions  for  e-  mail  pleadings,  filers  should  send  an  e-  mail  to 
 ecfs@  fcc.  gov,  and  include  the  following  words  in  the  body  of  the  message,  get  form  <your  e-mail 
 address>.  A  sample  form  and  directions  will  be  sent  in  reply.  This  document  may  also  be 
 purchased  from  the  Commission's  duplicating  contractor,  Qualex  International,  Portals  II,  445 
 12th  Street,  S.  W.,  Room  CY-  B402,  Washington,  D.  C.,  20554,  telephone  (202)  863-  2893, 
 facsimile  (202)  863-  2898,  or  via  e-  mail  qualexint@  aol.  com. 

 For  further  information,  contact  Tracey  Wilson,  at  (202)  418-  1394  or  Bill  Dever,  Policy 
 and  Program  Planning  Division,  Common  Carrier  Bureau  at  (202)  418-  1578. 
4