Burnaby B.C. and Rimouski, Quebec - TELUS has agreed to enter into a transaction that will see it acquire 70 per cent of QuébecTel Group (QuébecTel). TELUS intends to acquire 49 per cent of QuébecTel from its public minority shareholders and, through a corporate reorganization, 21 per cent of QuébecTel from a subsidiary of GTE, at a price of $23 per share, in cash, for an aggregate consideration of $585 million (Cdn). Following the proposed transaction, TELUS and GTE will hold respectively approximately 70 per cent and 30 per cent of the outstanding shares of the amalgamated company.
The agreement will allow TELUS to become a truly national telecommunications provider and enable QuébecTel to grow into a formidable Quebec competitor. If approved by shareholders, the transaction will free QuébecTel to pursue revenue growth initiatives that were previously limited by its foreign-owned and controlled status.
The QuébecTel Board has unanimously agreed to support the proposed transaction and to recommend that its shareholders vote in favor of it. In accordance with applicable securities and regulatory requirements, the Board of QuébecTel established a Special Committee of Independent Directors (Independent Committee) to supervise the valuation process. In arriving at its decision, the Board of QuébecTel relied on a valuation from Scotia Capital Inc. and a fairness opinion received from CIBC World Markets. The new QuébecTel will be fully compliant with Canadian foreign ownership and control rules and regulations under the Telecommunications Act.
"We're delighted to have finally come to terms with our foreign ownership issue," said Hugues St-Pierre, president and CEO of QuébecTel. "Becoming part of a Canadian-owned undertaking opens up fantastic growth opportunities for our customers, employees and community. Now, QuébecTel is ready to serve all of Quebec. "
"TELUS is committed to its national strategy. For TELUS, this accelerates its entry into Quebec by almost two years. It provides a strong management team with deep market knowledge together with an experienced employee base. It's a truly remarkable, strategic fit," said Brian Canfield, CEO of TELUS. "QuébecTel will play a significant role in leading the execution of the TELUS strategy in Quebec and we expect that a meaningful part of the execution of this strategy will be managed and staffed from the current Head Office of QuébecTel in Rimouski ."
For his part, Mike Masin, Vice Chairman, GTE stated: "GTE supports TELUS' strategy in Canada and sees the participation of management and employees of QuébecTel with TELUS as important to both TELUS strategy in Canada as well as GTE's plans for North America. GTE is fully supportive of this transaction. It effectively eliminates the operating restrictions currently placed on QuébecTel due to its "foreign-controlled" status while treating all QuébecTel shareholders fairly. "
After the transaction, TELUS will have annual revenues of $6.4 billion and assets of more than $8.5 billion.
TELUS' proposed transaction is conditional upon the approval by two-thirds of QuébecTel's public minority shareholders at a special meeting, expected in May. An information circular will be mailed to QuébecTel shareholders, which will provide them with the full terms of the proposed transaction, process and understandings between TELUS and GTE. Completion of the proposed transaction is also subject to approval of the Board of GTE.
TELUS will finance the proposed transaction through available debt facilities.
TELUS is Canada's second largest telecommunications company and provides a full range of advanced communication services and products connecting Canadians with the world. TELUS shares trade on the Toronto Stock Exchange under the stock symbols BTS (Common Voting) and BTS.A (Common Non-Voting).
QuébecTel Group owns and operates the second largest telecommunications system in Quebec with assets totaling $500 million. The Group has offices in the major cities of the province, including Montreal, Quebec City and Rimouski, and employs some 2,200 people. Its shares are listed on the Toronto Stock Exchange under stock symbol QTG. To know more about QuébecTel Group, visit www.QuébecTel.qc.ca.
With 1999 revenues of more than US$25 billion, GTE is a leading telecommunications provider with one of the industry's broadest arrays of products and services. In the United States, GTE provides local service in 28 states and wireless service in 18 states, as well as nationwide long-distance, directory, and internetworking services ranging from dial-up Internet access for residential and small-business consumers to Web-based applications for Fortune 500 companies. Outside the United States, the company serves customers on five continents. GTE is in the final stages of completing a US$53 billion merger with Bell Atlantic. Additional information about GTE can be obtained at www.gte.com.
For more information, please contact:
Public Relations and Information Director
QuébecTel Group Inc.
Tel.: (418) 722-5627
Pager: (418) 727-2006
TELUS Media relations manager
Tel.: (780) 498-7236
Cellular: (780) 914-7115