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

Tue Jan 14 17:55:50 UTC 2020

Greg,

"I suggest we need a balance.  We can't be totally zeroed in on the Ethos
Capital deal, but neither can we be transaction-agnostic.  There are things
to say about this particular transaction and things to say about the bigger
picture.  We need to address both, albeit with a largely forward-looking
focus (i.e., what should be done)."

Agreed.

Cheers!
David

On Tue, Jan 14, 2020 at 10:30 AM Marita Moll <mmoll at ca.inter.net> wrote:

> More information in yesterday's *Register *article describes it as a
> 30-year debt.
>
> "The few details that have emerged are a further cause of concern. The
> $1.135bn purchase is 32 per cent funded by debt; $360m has been raised from
> unnamed US financial institutions. PIR – the operator of the registry –
> “has sufficient operational cash flow to service the loan,” the documents
> claims, noting it is half what PIR has paid to ISOC each year. In other
> words, debt repayments will be approximately $15m a year, which points to
> 30-year loans."
>
> https://www.theregister.co.uk/2020/01/14/icann_org_redacted/
>
> Marita
> On 1/14/2020 4:56 AM, Holly Raiche wrote:
>
> Agree
>
> I share your concerns about the assumption by by PIR of so much debt.  It
> will make it that much harder for them to have a public interest focus with
> the burden of debt they are assuming.  It will certainly make any
> insistence on a public interest focus that much harder - even if we insist
> on commitments by Ethos for such focus.
>
> Holly
>
> On Jan 14, 2020, at 5:53 PM, Greg Shatan <greg at isoc-ny.org> wrote:
>
> I suggest we need a balance.  We can't be totally zeroed in on the Ethos
> Capital deal, but neither can we be transaction-agnostic.  There are things
> to say about this particular transaction and things to say about the bigger
> picture.  We need to address both, albeit with a largely forward-looking
> focus (i.e., what should be done).
>
> Greg Shatan
> greg at isoc-ny.org
> President, ISOC-NY
> *"The Internet is for everyone"*
>
>
> On Mon, Jan 13, 2020 at 3:11 AM Hadia Abdelsalam Mokhtar EL miniawi <
> Hadia at tra.gov.eg> wrote:
>
>> Agree with Marita that it is better to keep our response owner neutral.
>> Let our recommendations focus on the interest of the current registrants,
>> the public interest aspect and the trust that the end users need.
>>
>>
>>
>> Hadia
>>
>>
>>
>> *From:* CPWG [mailto:cpwg-bounces at icann.org] *On Behalf Of *Greg Shatan
>> *Sent:* Monday, January 13, 2020 8:19 AM
>> *To:* Marita Moll
>> *Cc:* CPWG
>> *Subject:* Re: [CPWG] Fwd: Re: Reuters reports new cooperative formed to
>> take over management of .ORG
>>
>>
>>
>> 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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