BT and AT&T to Jointly Acquire 33% of Rogers Cantel,
BT to Acquire 30% of AT&T's 31% Ownership of AT&T Canada
Agreements Provide AT&T Canada and Rogers Cantel Closer Ties with
UK-Based Multi-National Corporations, Increased Co-marketing and Bundling
Opportunities
LONDON, NEW YORK and TORONTO, Aug. 5 /CNW/ -
News Conference Scheduled: A news conference is scheduled at 11:00 a.m. (Eastern Time) this morning at News Theatre, 98 The Esplanade, Toronto. Senior management from BT, AT&T, Rogers Communications and Rogers Cantel will discuss the announcement and, following brief statements, will respond to questions.
Live coverage of the news conference, followed by B-roll, will be available via satellite on Anik E2C/8A, Downlink 4000 MHz (horizontal), Channel 15, Audio sub-carriers 6.8 and 6.2. The news conference will also be broadcast via the Internet at http://clients.activate.net/canada/newstheatre. A live audio bridge to the news conference for the media will be available toll free by calling 1-800-361-1028 (within North America) or 00-800-0022-8228 (within Europe). Reporters may call these numbers beginning at 10:45 a.m. ET and be connected live to the news conference and ask questions following the presentations. For technical information, please contact News Theatre at (416) 361-0070, ext. 237.
A graphic representation of the legal entity structure of the transactions can be found at www.att.com or www.rogers.com.
British Telecommunications plc (``BT'') and AT&T Corp. (``AT&T'') today announced that they have agreed on two important transactions in Canada.
First, BT and AT&T will jointly acquire a 33 per cent equity stake in Rogers Cantel Mobile Communications Inc. (``Rogers Cantel'') for an aggregate of approximately Cdn $1.4 billion (US $934 million, pnds stlg577 million) in cash. The transaction significantly enhances the relationship between Rogers Cantel and AT&T formed in 1996, while adding a major new international partner.
Second, BT will acquire 30 per cent of AT&T's 31 per cent equity position in AT&T Canada for approximately Cdn $600 million (US $402 million, pnds stlg248 million).
In addition, Rogers Cantel and AT&T Canada will accelerate the bundling and joint marketing of wired and wireless services for Canadian business customers.
These transactions, following the BT and AT&T joint investment in Japan Telecom in April of this year, are the second major joint initiatives by BT and AT&T since the two companies announced their proposed US $10 billion global venture last year.
The closing of the transactions is expected to take place on or about August 16th, 1999. There is a payment for non-completion of the Rogers Cantel transaction payable by AT&T and BT to Rogers Cantel of Cdn $1.50 per share.
John D. Zeglis, President of AT&T, said, ``Today's announcements represent a deepening of our commitment to the Canadian marketplace. The combination of AT&T, BT, Rogers Cantel and AT&T Canada will give Canadian businesses even better access to unrivaled mobile and wired services nationwide. And through our global joint venture with BT, Canadian companies will enjoy the seamless worldwide services they need to compete in the economy of the 21st century.''
Alfred T. Mockett, President and CEO of BT Worldwide, said, ``Rogers Cantel and AT&T Canada represent a significant addition to our global family of alliances and will enable BT to take an active part in the Canadian mobile and business wireline markets. Today's announcements are consistent with BT's strategy of concentrating on the fast moving, high growth areas of mobile, Internet and data communications.''
Edward S. (``Ted'') Rogers, Rogers Communications Inc. (``RCI'') President and CEO, said, ``This is an important day for RCI, Rogers Cantel and for the Canadian telecommunications marketplace. Today we are positioning Rogers Cantel for the future by aligning our Canadian strengths in wireless with two global telecommunications leaders, BT and AT&T.''
Charles E. Hoffman, Rogers Cantel's President and CEO said, ``Rogers Cantel embarked on the first stage of its relationship with AT&T in 1996 with a branding and technology alliance that included the co-branding of our products and services as Cantel AT&T. Today, we are strengthening that relationship to ensure that our customers and all Canadians will continue to have access to the best technology and wireless services wherever they travel -- across North America and internationally.''
James J. Meenan, Vice Chairman and CEO, AT&T Canada, said, ``We are delighted that BT has given AT&T Canada such a significant vote of confidence. This agreement further enhances our ability to offer one-stop shopping for business customers, provides seamless global reach for our Canadian business customers and closer ties with UK-based multi-national corporations.''
Summary of the Investment in Rogers Cantel by AT&T Corp. and BT
BT and AT&T will jointly acquire a 33.3 per cent equity stake in Rogers Cantel Mobile Communications Inc. (``Rogers Cantel'') for an aggregate of approximately Cdn $1.4 billion (US$934 million, pnds stlg577 million) in cash. This ownership position will be held through a newly established entity (``Wireless Co''), 50 per cent owned by AT&T and 50 per cent owned by BT.
Wireless Co will purchase approximately 27.8 million new convertible preferred shares from Rogers Cantel at a price of Cdn $34.70 per share. These convertible preferred shares will be convertible on a one-for-one basis after one year from the date of issue into approximately 15.3 million Class A Multiple Voting Shares and 12.4 million Class B Restricted Voting Shares. AT&T will also contribute 1.04 million Class B Restricted Voting Shares to Wireless Co acquired by AT&T pursuant to its 1996 brand agreement with Rogers Cantel. The price paid represents a premium of approximately 27 per cent over the 30-day average closing price and approximately 29 per cent over the 60-day average closing price of the underlying Rogers Cantel Class B Restricted Voting Shares on the Toronto Stock Exchange.
Rogers Cantel will receive approximately Cdn $964 million into its treasury on the issue of these shares. In addition, Wireless Co will acquire approximately 12.3 million Class A Multiple Voting Shares of Rogers Cantel from
RCI, also at a price of Cdn $34.70 per share, for a total of Cdn $427 million. As a result of these transactions, on a fully diluted basis, Wireless Co will own 33.3 per cent of the equity and 30.6 per cent of the Class A voting shares of Rogers Cantel. Under the Telecommunications Act, non-Canadians can own no more than 33.3 per cent of the voting shares of a Canadian telecommunications holding company such as Rogers Cantel. After this transaction, RCI will continue to own 69.4 per cent of the Class A Voting shares and 50.9 per cent of the equity of Rogers Cantel, on a fully diluted basis.
AT&T and BT will share four of the 16 Rogers Cantel board seats and will be granted other governance rights customary in a transaction of this nature. In addition, RCI has granted Wireless Co a right of first negotiation on the control block of Rogers Cantel, in the event that RCI wishes to sell control of Rogers Cantel.
AT&T Wireless Services will continue its long standing relationship with Rogers Cantel as North America's two largest TDMA providers with seamless cross-border capabilities and their highly successful Digital One-Rate(R) plan.
Summary of BT's Purchase of Interest in AT&T Canada from AT&T Corp.
BT will acquire 30 per cent of AT&T's 31 per cent ownership position in AT&T Canada for Cdn $600 million (US $402 million, pnds stlg248 million), which was calculated on the approximate 45 trading day, weighted average trading price of AT&T Canada on the Toronto Stock Exchange. This ownership position will be held through a newly established entity for interests in Canadian wireline operations (``Wireline Co''), 70 per cent owned by AT&T and 30 per cent owned by BT.
Wireline Co will hold approximately 30.8 per cent of the equity and 23.3 per cent of the voting interest in AT&T Canada.
Under the agreement, BT is obligated to participate in the second phase of AT&T's merger agreement with AT&T Canada up to a cap of Cdn $1.65 billion. AT&T Corp. retains the obligation beyond $1.65 billion to the full extent of the back end takeout.
Upon the closing of AT&T's sale of 30 per cent of its ownership position in AT&T Canada to BT, AT&T Canada will be beneficially owned 9 per cent by BT, 22 per cent by AT&T, and 69 per cent by the company's public shareholders. AT&T has agreed to grant one of its four board seats on the 12-member AT&T Canada board to a BT designee.
AT&T Corp. was advised by CIBC World Markets on both transactions. BT was advised by Morgan Stanley Dean Witter. Rogers Cantel was advised by NM Rothschild & Sons Canada Limited.
Note for Investors: This news release includes statements about expected future events and/or financial results that are forward-looking in nature and subject to risks and uncertainties, including satisfaction of the conditions to the transactions. For those statements, the companies claim the protection of the safe harbor for forward-looking statements provisions contained in the Private Securities Litigation Reform Act of 1995. The companies caution that actual performance will be affected by a number of factors, many of which are beyond the companies' control, and that future events and results may vary substantially from what the companies currently foresee. Discussion of the various factors that may affect future results are contained in the companies' recent filings with the Securities and Exchange Commission, the Ontario Securities Commission, and SEDAR.
About AT&T:
AT&T Corp. (NYSE: T) is the world's premier provider of voice and data communications, with more than 80 million customers, including businesses, government and consumers. AT&T runs the world's largest, most powerful long- distance network and the largest wireless network in North America. The company is a leading supplier of data and Internet services for businesses and the nation's largest direct Internet service provider to consumers. AT&T also provides local telephone service to a growing number of businesses. For more information visit www.att.com.
About BT:
British Telecommunications plc (NYSE: BTY) is one of the world's leading providers of telecommunications services. With a market capitalization of around 60 billion pounds sterling, it is one of the largest private sector companies in Europe. Its principal activity is the supply of local, long distance and international telecommunications services and equipment in the UK, serving 28 million exchange lines. International direct-dialled telephone service is available to more than 200 countries and other overseas territories -- covering 99 per cent of the world's 800 million telephones. BT is expanding its presence overseas rapidly and has operations in more than 30 countries worldwide, with joint ventures in the Republic of Ireland, France, Switzerland, Spain, Germany, Italy, the Netherlands, Sweden, New Zealand, Japan, Hong Kong, Singapore, Malaysia, Korea, India and Latin America. For more information visit www.bt.com.
About Rogers Communications
Rogers Communications Inc. (Toronto: RCI.A and RCI.B; NYSE: RG) is Canada's national communications company engaged in cellular and Digital PCS communications through its subsidiary Rogers Cantel Mobile Communications Inc., in cable television, high-speed Internet access, and video retailing through its wholly-owned subsidiary Rogers Cablesystems Limited, and in radio and television broadcasting, publishing and new media businesses through its wholly-owned subsidiary Rogers Media Inc. Rogers Communications Inc.'s significant portfolio investments include a 16 per cent interest in AT&T Canada. For more information visit www.rogers.com.
About Rogers Cantel:
Rogers Cantel is Canada's largest mobile company serving more than two million, Rogers Cantel provides a complete range of wireless solutions including cellular, paging and interactive messaging, digital PCS and wireless data services. The Cantel AT&T network currently covers more than 93 per cent of the Canadian population with Digital PCS service available to more than 80 per cent of Canadians. Pro-forma for this transaction, Rogers Cantel Mobile Communications Inc. (Toronto: RCM.B; NYSE: RCN), will be a 51 per cent owned subsidiary of Rogers Communications Inc. For more information visit www.cantel.com.
About AT&T Canada:
AT&T Canada is Canada's largest facilities-based competitive voice, data and Internet telecommunications provider. Created in June 1999 from the merger of AT&T Canada Long Distance Services, MetroNet Communications, Netcom Canada and ACC TelEnterprises, AT&T Canada brings together the country's largest competitive local exchange carrier, three of Canada's leading competitive internet Service Providers, and Canada's pioneer in competitive long distance. Deploying the most advanced fibre-optic networking and digital switching platforms, AT&T Canada offers customers across the country a full suite of local and long distance voice, data and Internet services - with excellent customer service, competitive pricing, and sales and service locations from coast-to-coast. AT&T Canada is a public company with its common stock traded on the Toronto and Montreal stock exchanges under the symbol TEL.B and on the NASDAQ National Market System under the symbol ATTC. Visit AT&T Canada's web site, www.attcanada.com, for more information about the company.
