MONTREAL – Quebec investment fund Caisse de depot et placement du Quebec is cutting its original investment in Quebecor Media from 45.3% to 24.6% in a deal worth about $1.5 billion. Quebecor Inc. bought back 30.5 million shares of unit Quebecor Media Inc (QMI) from Caisse and will increase its holdings in QMI to more than 75% from less than 55%.
Under the deal, Quebecor will purchase approximately 20.3 million shares of QMI held by the Caisse for an aggregate purchase price of $1 billion, payable in cash. Quebecor will buy back an additional 10.2 million shares by issuing to the Caisse $500 million in subordinated convertible debentures, which are convertible into Quebecor Inc. class B subordinate shares.
Caisse made its original $3.2 billion investment in Quebcor Media in 2000 at the peak of the media convergence craze in Canada. The value of the Caisse’s stake in Quebecor Media fell to $2.3-billion at the end of 2011.
Michael Sabia, president and CEO of the Caisse maintains that despite the buy back he is “convinced of QMI’s potential to create value.”
“For this reason, we are retaining a substantial stake in the company. In our view, the conditions are right to rebalance our portfolio by divesting a part of the major position we held in the media and telecom sector," added Sabia, President and Chief Executive Officer of the Caisse.
For its part Quebecor Media says it is taking advantage of low interest rates to take back a substantial interest in the company.
"We believe in the company's future. Repurchasing a portion of the Caisse's investment, while we continue our partnership, will allow us to benefit from the company's expected growth over the next few years," said Pierre Karl Peladeau, President and Chief Executive Officer of Quebecor, Quebecor Media and Sun Media Corporation.
