TORONTO and WINNIPEG – MTS said Friday that it has finalized the sale of Allstream to Zayo Group Canada Inc., a wholly-owned subsidiary of Colorado-based communications infrastructure service provider Zayo Group, LLC.
The $465 million all-cash deal was first announced in November. After closing costs, MTS said that it expects to realize net proceeds of approximately $420 million, approximately $15 million more than the anticipated net proceeds of the previously attempted sale of Allstream in May 2013 to Accelero Capital Holdings. That deal was nixed by the federal government a few months later amidst national security concerns.
MTS said it is finalizing the evaluation of its available capital allocation options, including the retirement of debt incurred to fund its pension funding pre-payment and spectrum acquisitions completed in 2015. More details on use of proceeds will be announced with the company's 2015 fourth-quarter and annual results on February 4, 2016.
"We are pleased to successfully conclude this transaction and fully deliver on our commitment to complete the turnaround and planned exit from Allstream, with the value of the business fully realized," said MTS president and CEO Jay Forbes, in the announcement. "The closing of this transaction represents an important milestone in delivering on the commitments we have made to our shareholders. With this exit from Allstream, MTS is in an improved position to continue our transformation to become a true, customer-first organization, leveraging our tremendous assets and unique position to deliver strong results in a competitive market."
