[Article] United Fiber & Data sold for $36.6M, leaving layoffs and litigation in its wake Options

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United Fiber & Data sold for $36.6M, leaving layoffs and litigation in its wake
Aimee Ambrose
York Dispatch
Published Jan 9 2025

United Fiber & Data is no more.

And investors will lose out.

The formerly York-based tech company, co-founded by members of rock band Live with fanfare and promise as a job creator and economic boost as well as the backing of the Appell family, has sold to a New York company in a deal that quietly closed last month.

Cablevision Lightpath acquired “substantially all” of UFD’s assets in the sale, documents obtained by The York Dispatch show. The acquisition proposal was announced in June, and Lightpath executives listed UFD’s data network as a key asset.

The network includes a 323-mile fiber optic route running between New York City and Ashburn, Virginia, with the line stretching through York County. Another 79-mile fiber network also operates in Manhattan and New Jersey.

Lightpath’s plans called for incorporating the UFD fiber into its existing 20,000-route-mile network.

The sale value was not included in the announcement in June.

But a memo from UFD’s interim CEO, Chris Lodge, to investors dated Dec. 5 revealed that Lightpath offered $36.6 million in the sale. The deal called for the transfer of $32.1 million in cash followed by another $4.5 million over 18 months if certain conditions were met.

Investors, however, won’t profit from the sale as the letter shows UFD carried $85 million in debt by the end of 2023. The Appell family, as the company’s primary backer, took the greatest loss. Lodge’s letter showing their losses match the amount of UFD’s debt.

“Since the purchase price will not exceed UFD’s debt obligations, there will be no sale proceeds in the Lightpath transaction to UFD’s equity holders,” Lodge’s letter states.

Lodge did not respond to a request for comments.

Since the letter was sent, UFD’s phone number and website are now directed to Lightpath. A spokesperson for Lightpath declined to comment on the sale, stating in an email: “Nothing to add at this time.”

Lou Appell III, a UFD board member who succeeded his late father with the company, also did not respond to a request for comment about the sale.

Chad Taylor, a UFD co-founder and former member of Live, thanked investors who supported the company and the company’s vision from the start in a written statement provided to the Dispatch.

Entrepreneur Bill Hynes, another co-founder, declined to comment.

UFD overview and controversy: UFD was publicly unveiled in York in February 2013 as the sibling company to Think Loud, a brand of businesses headed by Taylor, Hynes, and Chad Gracey and Patrick Dahlheimer, two other former members of Live and company co-founders.

Philanthropist and prominent business leader Lou Appell Jr. was UFD’s primary investor.

Work then got underway to build the fiber optic network.

Work was also underway at that time to renovate a vacant building at 210 York St. downtown, behind WellSpan Park. The building eventually became the headquarters for Think Loud and UFD.

Plans further included the construction of a data center as a hub for the fiber network. The former York County Prison along Chestnut Street, across from the Think Loud building, was slated for renovation into the hub.

By the end of the 2010s, UFD had undergone significant changes. Legal controversy, both civil and criminal, erupted going into the new decade, consuming both UFD and Think Loud.

Appell Jr. died in late June 2016, and his son succeeded him at the company.

The members of Live stepped down from UFD, and then later reformed the band and went back on tour.

Hynes also stepped down as UFD CEO briefly before stepping back into the role in 2015. He held the position until he had to resign in late 2019 when police charged him in a domestic violence case.

A civil lawsuit, led by Appell III, was filed a year later, accusing Hynes of plundering funds from the company for personal use.

Legal issues further grew around a related holding company that owned 210 York St., which eventually led to the sale of the building to new owners in late 2021 — a pair of business partners allegedly associated with Hynes, according to court documents.

UFD had pulled out of the building and relocated, apparently to Allentown.

Several events occurred like falling dominoes in 2022.

Appell III’s civil suit was settled, a move he later claimed he’d agreed to under duress to keep UFD afloat.

Hynes resolved the domestic violence case with a no-contest plea and time on home detention.

He, Gracey, Taylor and Dahlheimer became embroiled in multiple civil lawsuits related to Think Loud and their former headquarters. A small group of Think Loud investors also got involved.

Court documents show Hynes and Gracey often aligned against Taylor and Dahlheimer.

Then in 2023, Hynes was criminally charged in a theft case with allegations echoing those from Appell III’s settled civil suit.

Pennsylvania State Police and FBI investigators accused Hynes of stealing nearly $4.4 million from UFD during his time as CEO.

The bulk of that amount involved about $3 million from a line of credit Appell III provided to help secure a state grant for the 210 York St. building renovation.

Investigators alleged Hynes failed to repay Appell’s loan. They said he instead funneled the funds into other company accounts and used the finances to purchase the Metso Minerals plant across from 210 York.

Hynes has asserted he’s innocent of all the allegations.

He argued the Metso purchase was intended to serve UFD’s growth plans for building a data center as well as a tech and entertainment campus in the area around Think Loud’s headquarters.

The Lightpath deal: Chris Lodge’s letter to investors shows UFD brought in financial consultants in 2021 to get the ball rolling on finding new investors or a buyer for the company once its “open litigation matters” were resolved.

The search began in the summer of 2023, and the consultants contacted more than 200 groups, including equity funds and fiber and telecom companies, the letter shows.

From that 200, nine letters of interest came in. And of those nine, Lodge said the consultants recommended Lightpath’s proposed deal, adding up to $36.6 million, as the best value.

The memo indicates valuations from the nine letters of interest were lower than expected.

Feedback, Lodge said, showed UFD’s balance sheet — having operated at “multi-million-dollar losses for several years” — its “complicated” capital structure, the history of litigation and controversy, and the potential for more litigation, hurt the company’s value and marketability.

Lodge further noted in his letter that investors who served as debt holders, whose financing helped fund cash shortfalls, became unwilling to continue funding UFD. Debt mounted, which made company operations unsustainable.

By the end of 2023, UFD had more than $85 million in total secured debt principle and interest, the letter shows.

Lodge told investors that secured creditors agreed to let go of their liens on company assets to let the sale to Lightpath proceed. The move, though, meant creditors won’t be fully repaid and some will take a “substantial loss” as a result.

When the sale closed in late 2024, the letter shows all but two UFD employees were laid off. The remaining two held on to help with the acquisition transfers and UFD winddown.

“This was not the result that the Board, management, or investors desired when UFD was founded, but is a result of the reality in which UFD finds itself,” Lodge stated in his letter.

He said UFD executives did speak with accountants on memorializing equity losses so investors could potentially write them off on their taxes, according to the letter. It also indicates the Appell family would reach out to some investors “to address a portion of losses.”

Cablevision Lightpath is a subsidiary of New York City-based cable TV provider Altice USA, and it was jointly created by Morgan Stanley Infrastructure Partners.

Before the sale, UFD apparently owned the holding company, 319 Chestnut LLC, which owns the former jail that was supposed to become a data center. Whether Lightpath also acquired the LLC as part of the deal is unclear.

County property data shows the holding company still owns the site.
— Reach Aimee Ambrose at aambrose@yorkdispatch.com.

https://www.yorkdispatch.com/story/news/loc...ke/77580856007/