[CPWG] Fwd: Re: Reuters reports new cooperative formed to take over management of .ORG

Mon Jan 13 06:19:02 UTC 2020

Based on my experience, this is how all private equity deals are financed.
Since this is business as usual, I would not read much into it re:
uncertainty. It has nothing to do with “shortfalls,” as Kevin Murphy
surmised. In the go-go years, it was not uncommon to see up to 80%
financing, but banks are much more conservative now.

The thing that concerns me is that they are going to saddle PIR with the
$360 million of debt.  This is also not uncommon in PE deals, but this
concept of “pushing down the debt” is one of the more toxic aspects of PE
deals. I assume PIR is debt-free now. Going from debt-free to owing more
than 1/3 of a billion dollars is not a step in the right direction for any
company.  For a company that is allegedly going to embrace a public benefit
approach, it is teeth-grindingly dissonant.

The more this sounds like a “typical” PE deal, the more suspicious I get
that there will be anything  special about this PE firm or Post-Acquisition
PIR. Instead it sounds like business as usual.  That is not what is called
for here.

Greg

On Sun, Jan 12, 2020 at 6:23 PM Marita Moll <mmoll at ca.inter.net> wrote:

> Well, this information shows that the financing of this deal is not
> necessarily in the bag -- given that is mostly leveraged. These sorts of
> things can fall through. So our response has to be owner-neutral -- setting
> conditions for any new owner - IMHO
>
>
> Marita
> On 1/12/2020 5:05 PM, Maureen Hilyard wrote:
>
> Hi Marita
>
> And still lots more rumours and other information to come, no doubt.
>
> I think we should keep ourselves focused on what we have set out to do -
> to produce some constructive and forward thinking advice to the Board,
> along the lines that Ethos is the new owner and what we might suggest to
> ICANN (and PIR) about preserving the interests of  current and future .org
> registrants through the contractual processes and other recommendations.
>
> Otherwise we will be stuck in the same hole forever, as more information
> is thrown in.
>
> Maureen
>
> On Sun, 12 Jan 2020, 9:18 AM Marita Moll, <mmoll at ca.inter.net> wrote:
>
>> More information on the Ethos PIR takeover revealed in response to ICANN
>> questions.
>> Marita
>>
>> -------- Forwarded Message --------
>> Subject: Re: Reuters reports new cooperative formed to take over
>> management of .ORG
>> Date: Sun, 12 Jan 2020 16:56:05 +0000
>> From: Wisdom Donkor <wisdom.dk at GMAIL.COM> <wisdom.dk at GMAIL.COM>
>> Reply-To: Wisdom Donkor <wisdom.dk at GMAIL.COM> <wisdom.dk at GMAIL.COM>
>> To: NCSG-DISCUSS at LISTSERV.SYR.EDU
>>
>> DomainIncite has provided a summary of these documents:
>>
>> http://domainincite.com/25176-25176
>>
>> "here are the headlines:
>>
>> * The deal is being partly funded by an enormous loan.
>> * Technically, Ethos isn’t the direct buyer. There are at least three
>> corporate entities involved in the acquisition that we haven’t heard of
>> before.
>> * Ethos won’t reveal the names of the directors of PIR’s would-be owner.
>> * Another former senior ICANN staffer and long-time Fadi Chehadé
>> collaborator has been revealed as having an interest in the acquisition."
>>
>> Cheers,
>>
>> *WISDOM DONKOR*
>> President & CEO
>> Africa Open Data and Internet Research Foundation
>> P.O. Box CT 2439, Cantonments, Accra | www.aodirf.org  /
>> www.afrigeocon.org
>> Tel: +233 20 812 8851
>> Skype: wisdom_dk | Facebook: kwasi wisdom |  Twitter: @wisdom_dk
>> __________________________________________________
>> Specialization:
>> E-government Network Infrastructure and E-application, Internet
>> Governance,  Open Data policies platforms & Community Development, Cyber
>> Security,  Domain Name Systems, Software Engineering, Event Planning &
>> Management,
>>
>>
>> On Wed, Jan 8, 2020 at 10:28 AM Wisdom Donkor <wisdom.dk at gmail.com>
>> wrote:
>>
>>> In this 7 January 2020 article
>>> <https://www.cnbc.com/2020/01/07/reuters-america-internet-nonprofit-leaders-fight-deal-to-sell-control-of-org-domain.html?__source=sharebar%7Ctwitter&par=sharebar> we
>>> learn that, "*prominent internet executives told Reuters they have
>>> created a nonprofit cooperative they are offering as an alternative owner
>>> of .org.*"
>>>
>>> This would appear to me to pose an existential threat to ISOC, as this
>>> nonprofit cooperative - whose membership appears to me to have more
>>> political muscle than ISOC has - is not proposing to buy PIR from ISOC, but
>>> to instead have the .ORG Registry Agreement assigned to it by ICANN.
>>>
>>> The full article is here, and I have extracted some relevant quotes
>>> below:
>>> https://www.cnbc.com/2020/01/07/reuters-america-internet-nonprofit-leaders-fight-deal-to-sell-control-of-org-domain.html?__source=sharebar|twitter&par=sharebar
>>>
>>> *“What offended me about the Ethos Capital deal and the way it unfolded
>>> is that it seems to have completely betrayed this concept of stewardship,”
>>> said Andrew McLaughlin, who oversaw the transfer of internet governance
>>> from the U.S. Commerce Department to ICANN, completed in 2016.*
>>>
>>> *Maher and others said the idea of the new cooperative is not to offer a
>>> competing financial bid for .org, which brings in roughly $100 million in
>>> revenue from domain sales. Instead, they hope that the unusual new entity,
>>> formally a California Consumer Cooperative Corporation, can manage the
>>> domain for security and stability and make sure it does not become a tool
>>> for censorship.*
>>>
>>> *... **The initial seven directors of the cooperative include former
>>> founding ICANN President Michael Roberts, MacArthur Foundation
>>> philanthropist Jeff Ubois and Bill Woodcock, whose Packet Clearing House
>>> now runs the technical aspects of the .org system under contract.*
>>>
>>> *The new group has briefed members of the U.S. Congress and hopes to
>>> prompt the Internet Society to reconsider the sale. But its best shot at
>>> stopping the pending sale lies with ICANN, which can veto any change in
>>> ownership out of concern for the security, reliability or stability of the
>>> .org domain.*
>>>
>>> Best wishes,
>>>
>>> *WISDOM DONKOR*
>>> President & CEO
>>> Africa Open Data and Internet Research Foundation
>>> P.O. Box CT 2439, Cantonments, Accra | www.aodirf.org  /
>>> www.afrigeocon.org
>>> Tel: +233 20 812 8851
>>> Skype: wisdom_dk | Facebook: kwasi wisdom |  Twitter: @wisdom_dk
>>> __________________________________________________
>>> Specialization:
>>> E-government Network Infrastructure and E-application, Internet
>>> Governance,  Open Data policies platforms & Community Development, Cyber
>>> Security,  Domain Name Systems, Software Engineering, Event Planning &
>>> Management,
>>>
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-- 
Greg Shatan
greg at isoc-ny.org
President, ISOC-NY
*"The Internet is for everyone"*
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