Acquisition of MTS – March 17, 2017
announced in a transaction valued at approximately 3.9 billion dollars
announced The transaction was completed through a plan of arrangement. A detailed description of the plan of arrangement was provided in the MTS management information circular dated May 26, 2016, available at www.sedar.com.
MTS common shares were delisted from the Toronto Stock Exchange (TSX) on March 20, 2017.
Information for MTS shareholders
As specified under the plan of arrangement, MTS shareholders were entitled to elect and receive, for each MTS common share held, either:
- $40.00 in cash, subject to proration (the cash consideration); or
- 0.6756 of a BCE common share, subject to proration (the share consideration)
The share consideration was based on BCE's 20-day volume weighted average price of $59.21 on April 29, 2016 (the last trading day prior to the announcement of the transaction).
Shareholders could only elect to receive the cash consideration or the share consideration for all their shares; shareholders could not elect to receive a combination of cash and shares.
Any MTS shareholder who did not properly make an election by 5 pm eastern time on March 14, 2017 was deemed to have elected to receive, for each MTS common share, the cash consideration, subject to proration and rounding.
The aggregate consideration of approximately $2.9 billion paid to MTS shareholders was 45% in cash and 55% in BCE common shares. BCE funded the approximate $1.34 billion cash component through debt financing and issued 27,642,714 BCE common shares to fund the equity component.
IMPORTANT: the right to tender MTS shares will expire on March 17, 2023.
The table below indicates the entitlement received by MTS shareholders for each MTS common share. The proration was only applied to the cash consideration option.
|Cash consideration||$20.3977 in cash and 0.3311 of a BCE common share|
|Share consideration||0.6756 of a BCE common share|
No fractional shares were issued and BCE paid out fractional shares in cash.
An MTS shareholder who elected to receive share consideration or cash consideration but, because of proration, received a combination of BCE common shares and cash, was required to make a joint election to obtain a full or partial tax deferral. The tax instruction letter provided certain instructions on how to complete the tax election.
Tax instruction letter and questionnaire for former MTS shareholders
If you are a Canadian resident and wished to make a tax election for income tax purposes in respect of your MTS common shares disposed of pursuant to the plan of arrangement, you had to complete a short questionnaire within 90 days after the disposition of your common shares. Within 30 days of receipt of your completed questionnaire, a tax election form signed by BCE containing your information was provided to you.
Historical prices Manitoba Telecom Services Inc. (1997-2017)
Illustrative numerical tax examples
Information for MTS noteholders
On March 27, 2017, as part of BCE’s internal reorganization of MTS, MTS amalgamated with a wholly-owned subsidiary of BCE. The name of the amalgamated entity is Bell MTS Inc. (“Bell MTS”). Later that same day, Bell MTS transferred substantially all of its assets to Bell Canada, a wholly-owned subsidiary of BCE, in exchange for common shares of Bell Canada. In connection with such transfer, Bell Canada assumed all obligations (including payment obligations) under Bell MTS’ outstanding Series 8, 9 and 10 medium term notes (the “Notes”) and related trust indentures in accordance with their terms. BCE guaranteed Bell Canada’s obligations under the Notes and trust indentures and Bell MTS remained a co debtor with Bell Canada under the Notes and trust indentures. On March 30, 2017, the securities regulatory authority or regulator in each of the jurisdictions in Canada in which Bell MTS was a reporting issuer issued an order that Bell MTS has ceased to be a reporting issuer in such jurisdictions.
Does Manitoba Telecom Services Inc. (“MTS”) still exist?
Yes. However, effective on March 27, 2017, as part of BCE’s internal reorganization of MTS, it amalgamated with a subsidiary of BCE and changed its name to Bell MTS Inc. (“Bell MTS”)
Is MTS still a reporting issuer?
No. It ceased to be a reporting issuer on March 30, 2017.
Who is now responsible to make payments under MTS’ Series 8, 9 and 10 Notes?
In connection with the transfer to Bell Canada of substantially all of the assets of MTS, on March 27, 2017, Bell Canada assumed all obligations (including payment obligations) under the outstanding Series 8, 9 and 10 Notes and related trust indentures and BCE guaranteed Bell Canada’s obligations. MTS remained a co debtor with Bell Canada under the Notes and related trust indentures.
Is Bell Canada a reporting issuer and what are its continuous disclosure obligations?
Bell Canada is a reporting issuer in each of the provinces of Canada. However, Bell Canada does not file continuous disclosure documents such as consolidated interim or annual financial statements given that it relies on the continuous disclosure documents filed by BCE pursuant to an exemption under Canadian securities laws. The continuous disclosure documents of BCE (including its annual and interim financial statements which, going forward, will consolidate the financial information of Bell Canada and Bell MTS) can be found for viewing in electronic format at www.sedar.com and at www.bce.ca. As a condition of the exemption under Canadian securities laws, Bell Canada is only required to file consolidating summary financial information for BCE for the periods covered by BCE’s consolidated interim or annual financial statements.
What are the tax implications of Bell Canada’s assumption of the MTS notes for the noteholders?
We encourage you to seek advice from a financial and/or legal advisor. We believe that BCE’s public disclosure concerning the assumption of the notes by Bell Canada is sufficient for you, together with any advisor, to determine the tax implications that this has for you.
Why wasn’t noteholders’ consent obtained in connection with the transfer of MTS’ assets to Bell Canada?
The trust indentures governing the MTS notes permit the transfer of all or substantially all of the assets of MTS without obtaining noteholders’ approval, subject to certain conditions being satisfied. All such conditions were satisfied in the context of the transfer of substantially all of MTS’ assets to Bell Canada.