AYLMER, Ont. – Bragg Communications, owner of eastern cableco EastLink has made an offer to purchase Amtelecom Income Fund, the two companies announced this morning.
Bragg "announced today that they have entered into a definitive support agreement pursuant to which Bragg Communications will offer to acquire all of the outstanding units of Amtelecom by way of a take-over bid for $14.25 in cash per unit," says the press release.
"The offer represents a 26.7% premium over the closing price of the units on February 15, 2007 (the day prior to the announcement by Bell Aliant Regional Communications Income Fund ("Bell Aliant") that it intended to make an offer for Amtelecom). The Offer price is 9.6% above the Bell Aliant offer price of $13 per unit.
Back east, Bell Aliant and EastLink are fierce competitors in Nova Scotia and Prince Edward Island and to say Bragg’s bid to buy Amtelecom in southwestern Ontario is a surprise, is not a stretch.
Amtelecom’s board has unanimously determined that the offer is fair and will recommend that unitholders tender to the offer, says the press release. Amtelecom’s financial advisor, CIBC World Markets Inc., has provided an opinion to the Board of Trustees that the consideration to be received by the unitholders under the transaction is fair, from a financial point of view, to such unitholders.
Amtelecom has opposed Bell Aliant’s offer from the get-go.
"The Special Committee of the Board of Trustees of Amtelecom has carefully weighed this and alternative offers and has determined that entering into this support agreement with Bragg Communications provides the greatest value to our unitholders," said Stanley Stewart, Chairman of the Special Committee and Board of Trustees of Amtelecom. Each senior officer and each member of the Board of Trustees of Amtelecom intends to tender their Units to the Offer.
"Bragg Communications" decision to purchase Amtelecom is based on a desire to augment our existing business with a company that complements our expertise as a provider of cable, internet and telephone services," said Lee Bragg, co-CEO, Bragg Communications. TD Securities Inc. acted as financial advisor to Bragg Communications.
Amtelecom has entered into a support agreement with Bragg Communications that provides for, among other things, a non-solicitation covenant on the part of Amtelecom, a right in favour of Bragg Communications to match any competing offers, and both a non-completion fee payment of $3.67 million and the reimbursement of expenses of $1 million, to be paid by Amtelecom under certain circumstances.
The offer will be conditional upon a minimum of 66.67% of the units being deposited to the offer as well as receipt of all necessary regulatory approvals and other customary conditions.
The offer, unless extended, will expire 36 days from its commencement. The Fund agreed in the support agreement to waive the application of the Unitholder Rights Plan to the Offer.
