Telnet sold to IDRC

I first started at the Bemidji (Minn.) Pioneer as an intern in the summer of 1996. That would begin six years as a news reporter, sports reporter and copy editor for a small, six-day-per-week daily newspaper in northern Minnesota. I wrote a large range of stories from multiple beats, to features to sports, my favorite being the coverage of the Red Lake Reservation High School basketball team named the Warriors. Here is a collection of my stories from my time at the Pioneer.

May 6, 1997

By Devlyn Brooks

Staff Writer

With little fanfare and no forewarning, Fergus Falls-based Telnet Systems Inc. was sold recently for the second time in a year. Telnet, a telemarketing company, has a facility which has employed as many as 235 people in Bemidji's Industrial Park.

International Data Response Corporation announced in a May 1 news release it acquired Telnet Systems in mid-April for an undisclosed amount, adding 480 workstations in four call centers in Minnesota and South Dakota to IDRC's total 3,700 workstations nationwide.

With the acquisition of Telnet, and IntelliSell Corporation of Omaha, Neb., on April 15, IDRC now employs 5,500 and is a leading provider of outsourced telemarketing services to Fortune 1000 companies.

The approach taken by IDRC to announce their acquisition is glaring in contrast to the approach taken by Alabama-based Touch 1, which purchased Telnet last July. As opposed to IDRC's news release, the owners of Touch 1 held a news conference in Bemidji to announce its acquisition of Telnet, stating it would add up to 700 jobs at the Bemidji facility alone if the local work force would support it. A statement that never came to fruition.

Prior to IDRC's acquisition of Telnet, the company paid off a number of outstanding loans to area economic development agencies and private interests that totaled almost $800,000 -- a loan package that was promised to the original Telnet Systems Inc. to assist in equipment acquisition before it established its Bemidji facility.

According to Larry Young, director of Bemidji's Joint Economic Development Commission, who said he thought it might have been part of the purchasing agreement, IDRC paid back $200,000 to the Headwaters Regional Development Commission, $150,000 to the Northwest Minnesota Initiative Fund, $25,000 to the JEDC and $200,000 to the City of Bemidji, which obtained a Minnesota Economic Trade Office loan for the company.

$75,000 in loan money was offered by Otter Tail Power Company and several local banks was never used, Young said.

Telnet still will rent the building housing the Bemidji facility from the JEDC, which acquired the land and secured funding to build the site for the original Telnet Systems last year, Young said. And the company still will be responsible for property taxes and utilities.

"(The JEDC) is earning less in interest (from the loan that was paid by IDRC), but our money is not at risk any more," he said. "And it can be used for another project now."

According to Linda Farr, a spokeswoman for Touch 1, the company had purchased Telnet Systems last June wanting to use the company to sell its telephone long distance packages through an in-house division.

However, Telnet was not growing fast enough to support the telemarketing needs of Touch 1's long distance division, and the company was still needing outside telemarketing help, according to Farr.

Touch 1 sold to IDRC, a company created by the merger of two other companies in 1996. One of those companies was ProMark One, which was handling Touch1's telemarketing prior to its purchase of Telnet, Farr said.

"We could never get (Telnet) up to the level we needed, and through ProMark One's merger we could increase dour marketing levels by 4 percent by June," she said. "That was something our company needed."

However, Touch 1 will still be working with Telnet under the contract negotiated, Farr said. In the future, Telnet Systems will become a dedicated telemarketing firm of Touch 1's long distance services.

"(Telnet) feels like part of the Touch 1 family, and they did such a good job portraying our company," Farr said. "It was not one of the business decisions (Touch 1 President Jim Corman) wanted to make in his life."

As for IDRC, Marketing Manager Dawn Walher said there are no immediate plans for Telnet Systems Inc. in general. Buzz Stitzer, an employee of IDRC, has been named the vice president of operations for Telnet, but it will still be based in Fergus Falls.

She added Telnet will still operate under its own name, no other changes of personnel have been planned and employee benefits and compensation should stay the same -- if not improve.

"We're still in a growth mode, and we're continuing to expand to support the new contract with Touch 1," Walher said. "For now, it's business as usual (for Telnet)."