WINNIPEG – The Supreme Court of Canada has ruled against MTS Allstream in a pension dispute that originally dates back to 1997.
The litigation was launched by a group of unions and retirees around a $43 million pension surplus that existed when the company was sold to the public in an equity offering in 1997. The company appealed the original court decision issued in January 2010 and the Manitoba Court of Appeal ruled in its favour in February 2012. The plaintiffs appealed that decision to the Supreme Court the following April.
In a decision on Thursday, the Supreme Court reinstated the original lower court order "requiring MTS to make the $43.364 million in Initial Surplus plus interest at the New Plan rate of return from January 1, 1997 to the date of payment (plan rate interest) available to plan members to be used to pay for enhancements to their pension benefits."
MTS Allstream expressed disappointment with the Supreme Court decision, adding that it and its outside advisors are currently reviewing its implications. The company also said that a recent equity financing and strong cash flows means that it has “sufficient liquidity to satisfy all its pension funding obligations”, and promised an update during its Q4/13 results call scheduled for February 6, 2014.
"This is a very disappointing outcome, but we were prepared for this scenario and are confident that should we need to make additional pension payments this year, we can fully manage its financial impact while maintaining our long-term strategy for delivering shareholder value," said chief financial officer Wayne Demkey, in a statement.
