Aliant Information Circular
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3APR200609190156 ALIANT INC. NOTICE OF MEETING AND MANAGEMENT INFORMATION CIRCULAR FOR AN ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS TO CONSIDER A PLAN OF ARRANGEMENT TO CREATE BELL ALIANT REGIONAL COMMUNICATIONS INCOME FUND 13APR200616515482 April 14, 2006 THIS BOOKLET CONTAINS IMPORTANT INFORMATION FOR SHAREHOLDERS Map showing the geographic region to be serviced by the operating entities of Bell Aliant Regional Communications Income Fund 13APR200622304608 11APR200600291134 April 14, 2006 Dear Shareholders: You are invited to attend the annual and special meeting (the ‘‘Meeting’’) of the holders of common shares (‘‘Aliant Common Shares’’) and preference shares, series 2 (‘‘Aliant Preferred Shares’’) of Aliant Inc. (‘‘Aliant’’) to be held at the Fairmont Newfoundland, Fort William Ballroom, 115 Cavendish Square, St. John’s, Newfoundland and Labrador, on May 17, 2006 at 2:00 p.m. (local time). At the Meeting, shareholders will be asked to consider and vote upon a proposed reorganization of Aliant pursuant to a plan of arrangement (the ‘‘Arrangement’’) under the Canada Business Corporations Act (the ‘‘CBCA’’) and holders of Aliant Common Shares will be asked to consider the other matters outlined in the accompanying notice of the Meeting. I am very excited to share with you important information about this proposal to partner with Bell Canada to form one of the largest regional telecommunications service providers in North America, serving customers in six provinces and headquartered in Atlantic Canada. With your approval of this transaction, we will generate increased value for our shareholders and, together with Bell Canada, compete more effectively in this rapidly changing industry. Success in our industry is greatly influenced by scale. The proposed Arrangement will combine our wireline telecommunications operation in Atlantic Canada, information technology operation and other operations with Bell Canada’s wireline telecommunications operation in its regional territories in Ontario and Quebec´ and its indirect 63.4% interest in NorthernTel, Limited Partnership and Tel´ ebec,´ Limited Partnership. Under the Arrangement, holders of Aliant Common Shares will exchange each of their Aliant Common Shares for one unit of a new income trust. The new income trust will indirectly own an interest in these combined telecommunications operations, which will be twice the size of the current Aliant and occupy a key position as a leading provider of wireline communications, including broadband, information technology and the latest in value-added products and services. At the same time, we recognize that we lack scale in our wireless telecommunications operation to further advance the service provided to our customers. For that reason it is proposed that, as part of the Arrangement, Aliant’s wireless telecommunications operation and its interest in the retail outlets of DownEast Ltd. will be transferred to Bell Canada. Your Board of Directors has concluded that the Arrangement is good for Aliant and Aliant shareholders, and is recommending that you approve it for a number of reasons including: Shareholder Value Creation: This transaction will create one of the largest regional telecommunications service providers in North America. These high quality wireline assets are well suited for an income trust structure, as they have historically provided stable and predictable cash flows. Trust units tend to trade at a premium to common shares. Another benefit of income trusts is that they typically provide relatively high regular cash distributions. Initially, the new income trust is expected to pay monthly distributions of approximately $0.23 per unit (approximately $2.74 per year). Headquarters in Atlantic Canada: For over one hundred years we’ve been serving customers in geographically dispersed regions and connecting them to the world through state-of-the-art technology. Choosing Atlantic Canada for the headquarters for the new income trust is a strong testament to the skill and professionalism of our employees. Customer Focus: By combining our respective financial strengths with the skill and dedication of our people across six provinces, we will be able to provide the finest telecommunications services to customers in Atlantic Canada and the regional markets of Ontario and Quebec.´ We are confident that customers will receive the same or better service as a result of this transaction. i Economies of Scale: Success in the telecommunications business is greatly influenced by scale. The combined operations will be twice the size of Aliant by scale and scope. By pooling our resources, we expect to leverage our respective strengths, find ways to operate more efficiently and with less cost, offer rewarding jobs to employees and compete more effectively. I can assure you that both management and Aliant’s Board of Directors have analyzed the merits of this transaction very carefully over the past number of months. A special committee of independent members of the Board of Directors considered all aspects of the proposed transaction without the involvement of any BCE Inc. nominees. The Independent Committee also engaged Scotia Capital Inc. and TD Securities Inc. to consider the fairness of the transaction, from a financial point of view, to shareholders of Aliant other than BCE Inc. and its affiliates. Scotia Capital and TD Securities have each concluded that the transaction is fair, from a financial point of view, to such shareholders. In addition, the Independent Committee retained TD Securities to provide a formal valuation of the non-cash assets being transferred. The Independent Committee recommended the Arrangement to the Board of Directors, and the Board of Directors now recommends it to you, our shareholders. The Board of Directors has unanimously (excluding the BCE Inc. nominees, who abstained) determined that the Arrangement is in the best interests of Aliant and its shareholders, and recommends that shareholders vote in favour of it on May 17th. This transaction is subject to a number of approvals, in addition to approval from you, our shareholders. The other approvals include approval of the Supreme Court of Nova Scotia and certain regulatory approvals. In the case of approval by shareholders, the resolution approving the transaction must be approved by not less than (i) 662⁄3% of the votes cast at the Meeting by holders of Aliant Common Shares and Aliant Preferred Shares, voting together, and (ii) a simple majority of the votes cast by Common Shareholders, other than BCE Inc. and its related parties, directors and officers of BCE Inc. and Bell Canada and directors and officers of Aliant and its subsidiaries, in person or by proxy, at the Meeting. Enclosed with this letter you will find a significant amount of information regarding the proposed Arrangement and the new income trust. The accompanying management information circular provides a detailed description of the Arrangement. Please give this material your careful consideration. If you require assistance, consult your financial, tax or other professional advisors. And of course you may always contact Aliant Investor Relations or our proxy solicitation agent Georgeson Shareholder Communications Canada Inc. for further information: Aliant Investor Relations — Toll free in Canada and the United States: 1-877-AIT-3113 (1-877-248-3113) Fax: (877) 498-2464 Email: [email protected] Georgeson Shareholder — Toll free in Canada and the United States: 1-866-746-7670 If you are unable to attend the Meeting in person, please complete and deliver the enclosed form of proxy so that your shares can be voted at the Meeting. Instructions on how to complete the proxy can be found in the accompanying management information circular. On behalf of the Board of Directors, management and the employees of Aliant, I would like to thank you for your continued support of Aliant. We look forward to seeing you at the Meeting. Yours very truly, 13APR200611142304 Jay Forbes President and Chief Executive Officer ii ALIANT INC. NOTICE OF ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS To be held on May 17, 2006 NOTICE IS GIVEN that an annual and special meeting (the ‘‘Meeting’’) of the holders (‘‘Common Shareholders’’) of common shares (the ‘‘Aliant Common Shares’’) of Aliant Inc. (‘‘Aliant’’), and a special meeting of the holders (‘‘Preferred Shareholders’’) of preference shares, series 2 (the ‘‘Aliant Preferred Shares’’) of Aliant (solely for the purposes of considering the Arrangement Resolution (as defined below)), will be held at the Fairmont Newfoundland, Fort William Ballroom, 115 Cavendish Square, St. John’s, Newfoundland and Labrador, on May 17, 2006 at 2:00 p.m. (NDT) for the following purposes: (1) to receive the consolidated financial statements for the year ended December 31, 2005, and the auditors’ report on the financial statements; (2) to elect directors for a term expiring on the earlier of the closing date of the Arrangement (as defined below) and the next annual meeting of Common Shareholders; (3) to appoint auditors of Aliant to hold office until the end of the next annual meeting of Common Shareholders (or their earlier resignation or removal by shareholders in accordance with applicable law) and to authorize the directors to fix their remuneration; (4) to consider, pursuant to an order (the ‘‘Interim Order’’) of the Supreme Court of Nova Scotia dated April 13, 2006, and, if deemed advisable, to pass, with or without variation, a special resolution (the ‘‘Arrangement Resolution’’),