Manitoba Telecom Services announced a binding agreement to sell its unit Allstream to Zayo Group for CAD 465 million cash. MTS said the sale of Allstream, plans for which were first announced in July, will bring it a stronger position to transform into a more customer-first business, leveraging its assets and position to deliver solid results in a competitive market.
The transaction is subject to certain closing adjustments, including normalised working capital, as well as certain pension-related obligations. The sale was approved by the MTS board of directors and is expected to close in the first quarter of 2016. The transaction is subject to important regulatory approvals, including national security approval and Competition Bureau approval, as well as customary closing conditions.
After closing costs, MTS expects to realise net proceeds of approximately CAD 425 million. The company said it will evaluate a number of capital allocation options available to it, including the retirement of debt incurred to fund its pension funding prepayment made earlier in 2015 and recent spectrum acquisitions.