By Ahmad Hathout
Rogers announced Friday it has finalized an agreement to sell for $7 billion a 49.9 per cent stake in a portion of its wireless traffic transport infrastructure through a subsidiary to pay down debt.
The investors will be led by American asset manager Blackstone and include the Canada Pension Plan Investment Board, Caisse de depot et placement du Quebec, the Public Sector Pension Investment Board, and the British Columbia Investment Management Corporation. Blackstone will also hold a 20 per cent voting stake.
Rogers, which will hold the rest of the shares including voting control, will continue to have full operational control of the underlying network and will also be able to buy back the minority stake at any time between 2033 and 2037. It said the subsidiary is expected to distribute up to $400 million a year to Blackstone in the first five years after the deal’s closing, which is expected in the second quarter this year.
The telecom announced in October that it entered an agreement to sell a stake in the model, but didn’t mention the prospective buyer.
“This strategic partnership demonstrates the confidence investors have in Rogers and in our world-class assets,” Rogers President and CEO Tony Staffieri said in a press release.
It said it will use the upfront funds to pay down the debt.
“This transaction will strengthen the company’s investment grade balance sheet by reducing our borrowings and unlocking the unrecognized value of critical assets,” Rogers CFO Glenn Brandt said in a press release. “With this transaction, Rogers will have issued an aggregate $9 billion of equity-valued capital since year-end, which is expected to reduce leverage by almost 1 turn.”
Financial results of the subsidiary will be released as part of Rogers’s quarterly statements.
Rogers has made major investments over the last couple of years, including to buy Shaw Communications, the rights to Warner Bros. Discovery and NBCUniversal, Bell’s stake in Maple Leaf Sports and Entertainment and, most recently, a megadeal for the rights to broadcast NHL games over the next 12 years.
But it has also moved to offload what it considers non-core assets, including real estate and its shares in telecom Cogeco.
Rogers isn’t the only one looking at this kind of structure to reduce its debt. Telus announced late last month that it is looking at a similar strategy of selling the same percentage stake in its tower portfolio.
