In August, the private equity owners of Alltel met privately with FCC Chairman Kevin Martin and told him that the pressures from the ongoing credit crunch limited their ability to grow the company, thus leading to the $28.1 billion proposed sale of the Little Rock-based telecom to Verizon Wireless.

In a revealing regulatory notice known as an ex parte presentation, officials with the ownership company of Alltel – Atlantis Holdings – disclosed that financial pressures made it difficult to raise the capital to make necessary future investments in the company.

A portion of the letter states:

Given current market conditions, TPG and the Goldman Sachs fund GS Capital Partners, the private equity funds that control and have ownership interest in Atlantis Holdings, are concerned that Atlantis Holdings may be constrained for some time in its ability to raise the capital necessary to fund the short-term investments necessary to grow Alltel’s service in rural markets.

As a result, when approached by Verizon Wireless in April 2008, TPG and Goldman Sachs determined that the offer by Verizon Wireless to purchase Alltel was the best vehicle available to ensure future capital-intensive investments in wireless services that are important to rural America and to Alltel’s customers.

Or it could have just been the cleanest way for Atlantis to exit the Alltel investment and still make a decent profit.  Alltel was bought by the private equity group in 2007 for nearly $27 billion, and in June 2008 the $28 billion Verizon-Alltel deal was announced.

The FCC disclosure letter further states that participants in the August meeting answered questions on issues raised by FCC representatives about deteriorating financial conditions.  Those questions and answers were not enumerated in the letter, which you can read in full at this link.

The FCC will likely consider the Alltel-Verizon merger at its Nov. 4 meeting.  The deal is on the tentative agenda for the regulatory agency that must approve the buyout.  The U.S. Department of Justice, which must also grant regulatory approval, is examining the proposed transaction for anti-trust concerns.

In another development, a new partnership of public interest groups protesting the Verizon-Alltel combo has emerged.  The Public Interest Spectrum Trust represents six consumer advocacy organizations and will reportedly meet with the FCC commissioners this week to urge them to consider rules that would prevent the newly merged company from violating open access rules that apply to wireline Internet service providers (ISPs).