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Teleglobe acquisition

About the Teleglobe acquisition

Acquisition of Teleglobe - November 1, 2003

Please note that the rights to exchange your Teleglobe shares in BCE shares expired on November 1, 2003, at 12:00 am. See section 4.5 of the circular (PDF 3 MB - Apr 13, 2010). This is a summary of the tax implications of the Teleglobe acquisition for BCE shareholders. You should also read the Teleglobe Management Information Circular (PDF 3 MB - Apr 13, 2010), regarding the transaction in the Annexes attached thereto and the documents incorporated therein by reference. Certain terms used below are defined in the Glossary of Terms in the Circular.

The following information is a summary and is provided for your convenience:

Background 

Prior to the acquisition of Teleglobe, a blue Letter of Transmittal was mailed to Teleglobe’s shareholders, together with the Teleglobe Management Information Circular (PDF 3 MB - Apr 13, 2010). To receive BCE common shares, former Teleglobe shareholders had to complete and return the blue Letter of Transmittal, together with the certificate (s) for their Teleglobe Common Shares in the envelope enclosed with the Circular, specifying the whole number of Teleglobe Common Shares that were to be exchanged for either the Share Elected Consideration or the Cash Elected Consideration. Former Teleglobe Shareholders who did not return a duly completed Letter of Transmittal by the Election Date were deemed to have made the Share Election. Former Teleglobe Shareholders whose shares were held in the name of their broker or other nominee should contact their broker or other nominee for any questions regarding the above.

Share elected consideration 

Former Teleglobe shareholders whose shares were held in the name of their broker or other nominee should contact their broker or other nominee for any questions regarding the following.

The following table illustrates the consideration received by a former holder of 100 Teleglobe common shares who made (or was deemed to make) the share election. The "BCE WATP" (as such term is explained in the next section) equals Cdn $35.71.

BCE WATP (in CDN$)Number of whole BCE common shares (per 100 Teleglobe shares)Value of BCE common shares (in CDN$)Total cash to be received in fractional sharesValue of total consideration
$35.71 90,72 $3,239.61 $35.71 $3,274.61

Cash elected consideration 

If you made the cash election within the duly prescribed period, the following table illustrates the consideration received by a former holder of 100 Teleglobe common shares who made the cash election for the maximum consideration and would therefore receive 20% of the consideration in cash.

BCE WATP (in CDN$)Number of whole BCE common sharesValue of BCE common shares (in CDN$)Total cashValue of total consideration
$35.71 72 $2,571.12 $678.49 $3,249.61

Former Teleglobe shareholders who did not make a valid cash election were deemed to have made the share election. Former Teleglobe shareholders who made a valid cash election but who did not specify the elected cash amount were deemed to have elected an elected cash amount equal to the maximum cash consideration and accordingly received cash consideration for each Teleglobe common share equal to Cdn $0.10 plus the maximum cash consideration.

The weighted averaged trading price (WATP) 

BCE’s Weighted Averaged Trading Price (WATP) is the designated value of the BCE Common Shares used to determine the consideration payable to Former Teleglobe Shareholders under the Arrangement. It is the weighted average trading price of the BCE Common Shares on the TSE for the ten trading days ending on the fifth Business Day immediately preceding the Effective Date, rounded to the nearest cent. The WATP was declared by a press release issued by BCE on October 26, 2000 as $35.71 (calculated on the basis of ten trading days commencing on October 12, 2000 and ending October 25, 2000).

The Elected Cash Amount was calculated in Canadian dollars and was paid in Canadian dollars, unless the U.S. Dollar election was made. Former Teleglobe Shareholders who made the U.S. Dollar election in the Letter of Transmittal were entitled to receive the Elected Cash Amount (as well as other cash payments to which they were entitled) in U.S. dollars from BCE in an amount calculated as the U.S. dollar equivalent of the comparable Canadian dollar amount.

Summary of the tax implications for Canadian shareholders 

If the fair value of the shares and any cash you received from BCE for your Teleglobe common shares on the effective date of the Arrangement was more than your adjusted cost base for the Teleglobe shares, you may have a taxable capital gain. Former taxable shareholders were eligible (depending upon the former holder's particular circumstances) to obtain a full or partial tax-deferred rollover for Canadian income tax purposes by entering into a joint tax election with BCE and filing it with the appropriate tax authorities. A taxable shareholder who wished to take advantage of the rollover treatment must have, in the letter of transmittal, certified that the holder is a taxable shareholder, and must have ensured that BCE, through the depositary, received a duly completed tax election filing package by no later than January 15, 2001.

Summary of the tax implications for non residents 

Former Teleglobe shareholders who are non-residents of Canada generally were not subject to Canadian tax in respect of any capital gain realized on the disposition of Teleglobe common shares to BCE pursuant to the Arrangement.

Summary of the tax implications for U.S. shareholders 

The Arrangement did not qualify as a tax-free reorganization for U.S, federal income tax purposes and therefore constituted a taxable transaction to U.S, holders generally giving rise to a gain (or loss) to the extent that the sum of the cash and fair market value of the BCE common shares received exceeded (or was exceeded by) the U.S. holder's adjusted tax basis in the Teleglobe common shares exchanged there for. Any gain or loss recognized a capital gain or loss if the Teleglobe common shares were held as a capital asset at the effective date. In the event that any recognized gain or loss was treated as a capital gain or loss, it will constitute a long-term capital gain or loss if the U.S. holder has held the Teleglobe common shares for more than one year at the effective date and was short-term capital gain or loss if the U.S. holder has held the Teleglobe common shares for one year or less.

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