Select TMC Agents to Get Equity Payout

By Khali Henderson

About 50 agents of TMC Communications  will receive equity payouts when TMC closes its sale to GLOBALINX Enterprises later this year, making it one of very few plans to do so.

GLOBALINX, a VoIP services provider, announced Tuesday its intent to acquire TMC, a reseller. Terms of the deal between the privately-held companies were not disclosed, but it is expected to close in 60-90 days pending regulatory approvals.

TMC President Ron Ireland told PHONE+ that about 50 agents maintained contracts that entitle them to a bonus as a percentage of revenue on the books with TMC at the close of the sale.

The equity agreements were offered to agents when the company was founded in 1997 by John Marsch. Marsch, who had successfully built and sold the original TMC, relaunched the company with the intention of providing agents with a piece of the company they helped to build. A 1998 PHONE+ article shares the details of the contracts: According to the agreement, agents share in up to 70 percent of the capitalized value of their customer base when the company is sold.”

“For years, telecom agents have always been shafted,” Marsch said in the 1998 article. “They help companies build and grow and then if the company is sold, they receive nothing additional for their efforts.”

Sadly, Marsch died of cancer in 2006, so he will not see his vision realized.

Ireland, who took on the role of TMCs president in addition to being CFO, said the equity contracts were issued to agents up until about 2002. He declined to disclose how much money would be paid out to equity contract holders.

Equity programs have wafted in and out of favor in the telecom agent channel. Few of the plans actually have paid for agents. Here are a few: In summer 2001, Lightyear paid an equity disbursement in excess of $6 million to each of its “founding agents” after a merger with VarTec Telecom Inc.  In spring 2003, switchless reseller Telcorp Ltd. issued agent equity payments after its acquisition by NUI Telecom, the telecom unit of energy company NUI Corp. Payouts ranged from $25,000 to $700,000. The acquisition of CLEC Mpower Communications Corp. by rival TelePacific Communications in summer 2006 triggered more than $500,000 in payouts to Mpower agents that earned warrants in the company. When PAETEC went public through its merger with US LEC in 2007, 500,000 warrants issued to about 30 agents in 1999 were valued at $6 million to $7 million. While exercisable since June 2008, most of the PAETEC warrants have not yet been cashed out.