Bct.Telus Communications Inc
Total Page:16
File Type:pdf, Size:1020Kb
TM NOTICES OF SPECIAL MEETINGS AND JOINT MANAGEMENT PROXY CIRCULAR WITH RESPECT TO AN ARRANGEMENT INVOLVING BC TELECOM INC. Ð and Ð TELUS CORPORATION Notice to BC TELECOM Shareholders of Petition to the Supreme Court of British Columbia for Approval of an Arrangement under the Canada Business Corporations Act Ð and Ð Notice to TELUS Shareholders of Petition to the Court of Queen's Bench of Alberta for Approval of an Arrangement under the Business Corporations Act (Alberta) December 8, 1998 TABLE OF CONTENTS Page Page SUMMARY ............................... 1 Court Approvals ........................... 51 GLOSSARY OF TERMS ....................... 9 Shareholder Approvals ....................... 52 JOINT MANAGEMENT PROXY CIRCULAR .......... 13 Regulatory Approvals ........................ 52 SOLICITATION OF PROXIES ................... 14 Other Conditions Precedent .................... 53 APPOINTMENT AND REVOCATION OF PROXIES ..... 14 PROCEDURES FOR EXCHANGE OF VOTING AND RECORD DATE .................. 16 SHARE CERTIFICATES ..................... 54 THE ARRANGEMENT ....................... 18 Exchange of BC TELECOM Common Shares .......... 54 General ................................ 18 Exchange of TELUS Common Shares .............. 54 Background to the Arrangement .................. 18 Fractional Shares .......................... 55 BENEFITS OF THE TRANSACTION ............... 20 EFFECTIVE DATE .......................... 55 Platform for Growth ......................... 20 ACCOUNTING TREATMENT ................... 55 Synergies ............................... 20 STOCK EXCHANGE LISTINGS .................. 56 Enhanced Capital Markets Profile and Financial Resources . 20 EMPLOYEE MATTERS ....................... 56 Relationship with GTE ....................... 21 ELIGIBILITY FOR INVESTMENT ................ 56 DELIBERATIONS AND RECOMMENDATIONS ........ 21 RESALE OF BCT.TELUS SHARES ................ 57 BC TELECOM Independent Committee ............. 21 COSTS OF THE ARRANGEMENT ................ 57 Opinions of Financial Advisors to BC TELECOM ....... 23 INVESTMENT CONSIDERATIONS ................ 57 Recommendation of BC TELECOM Board of Directors .... 24 Industry Considerations ....................... 57 TELUS Transaction Review Committee .............. 25 BCT.TELUS Considerations .................... 59 Opinions of Financial Advisors to TELUS ............ 26 CERTAIN INCOME TAX CONSIDERATIONS .......... 62 Recommendation of TELUS Board of Directors ........ 27 Canadian Federal Income Tax Considerations .......... 62 THE EFFECT OF THE ARRANGEMENT ON BC TELECOM Optionholders and TELUS Optionholders . 66 SHAREHOLDINGS ........................ 28 United States Federal Income Tax Considerations ........ 66 Share Exchange ........................... 28 Option Exchange .......................... 29 BC TELECOM SHAREHOLDERS RIGHTS OF DISSENT . 69 Schematic Representations of the Arrangement Process .... 30 TELUS SHAREHOLDERS RIGHTS OF DISSENT ....... 71 BCT.TELUS COMMUNICATIONS INC. ............. 31 INFORMATION RELATING TO BC TELECOM ........ 72 Business Strategy .......................... 31 Documents Incorporated by Reference .............. 72 Fibre Acquisition .......................... 31 Recent Developments ........................ 73 Business Activities .......................... 32 Price Range and Trading Volumes of BC TELECOM Common Shares .......................... 74 Directors ............................... 33 INFORMATION RELATING TO TELUS ............. 74 Executive Officers .......................... 35 Dual Head Offices .......................... 35 Documents Incorporated by Reference .............. 74 Corporate Governance ....................... 35 Recent Developments ........................ 75 Principal Holders of Securities ................... 35 Price Range and Trading Volumes of TELUS Common Shares .......................... 76 Auditors, Transfer Agent and Registrar .............. 36 INTEREST OF MANAGEMENT AND OTHERS IN THE Dividends ............................... 36 ARRANGEMENT ......................... 77 Pro Forma Combined Consolidated Capitalization LEGAL MATTERS .......................... 77 of BCT.TELUS .......................... 36 BC TELECOM CERTIFICATE ................... 78 Stock Options ............................ 38 TELUS CERTIFICATE ........................ 79 Pro Forma Interest and Asset Coverage ............. 38 Memorandum and Articles of BCT.TELUS ........... 38 APPENDIX A Ð SPECIAL RESOLUTIONS ........... A-1 Stock Option Plans ......................... 41 APPENDIX B Ð ARRANGEMENT AGREEMENT ....... B-1 Dividend Reinvestment and Share Purchase Plans ....... 41 APPENDIX C Ð INTERIM ORDERS ............... C-1 Employee Share Purchase Plans .................. 41 APPENDIX D Ð PROCEDURE TO EXERCISE DISSENT RIGHT UNDER THE CBCA ................... D-1 DETAILS OF THE ARRANGEMENT AND RELATED TRANSACTIONS .......................... 42 APPENDIX E Ð PROCEDURE TO EXERCISE DISSENT RIGHT UNDER THE ABCA ................... E-1 The Arrangement Agreement ................... 42 APPENDIX F Ð FAIRNESS OPINIONS .............. F-1 Compensation and Option Agreements .............. 43 APPENDIX G Ð INFORMATION RELATING TO Arrangement Steps ......................... 43 BC TELECOM INC. ........................ G-1 Comparisons between the BCCA and each of the CBCA and APPENDIX H Ð INFORMATION RELATING TO TELUS the ABCA ............................. 44 CORPORATION .......................... H-1 Voting Agreement .......................... 46 APPENDIX I Ð BCT.TELUS COMMUNICATIONS INC. Pre-Arrangement Transaction ................... 47 UNAUDITED PRO FORMA COMBINED Relationship between GTE and BCT.TELUS After CONSOLIDATED FINANCIAL STATEMENTS ........ I-1 the Arrangement ......................... 48 APPENDIX J Ð LONG-TERM RELATIONSHIP Stentor Alliance ........................... 51 AGREEMENT ............................ J-1 KEY APPROVALS .......................... 51 APPENDIX K Ð NOTICES OF PETITION ............ K-1 TM December 8, 1998 Dear Shareholders of BC TELECOM Inc. and TELUS Corporation: We are pleased to provide you with notice of a special meeting of the holders of common shares and options of BC TELECOM Inc. to be held at the Park Ballroom, Four Seasons Hotel, 791 West Georgia Street, Vancouver, British Columbia on January 21, 1999 at 10:00 a.m. (Pacific Standard Time) and notice of a special meeting of the holders of common shares and options of TELUS Corporation to be held at the Winspear Centre, #4 Sir Winston Churchill Square, 9720 - 102nd Avenue, Edmonton, Alberta on January 19, 1999 at 10:30 a.m. (Mountain Standard Time), both of which are for the purpose of considering the proposed merger of equals of BC TELECOM Inc. and TELUS Corporation. The formal Notices of Meetings and Joint Management Proxy Circular of BC TELECOM and TELUS accompany this letter and contain a detailed description of the proposed merger as well as outline the actions to be taken at the meetings. Specifically, the shareholders and optionholders of each company will be asked to vote on a special resolution to approve a proposed Plan of Arrangement whereby BC TELECOM and TELUS will merge and form a new public company, BCT.TELUS Communications Inc. We urge you to give this material your careful consideration and suggest you consult your financial, tax or other professional advisors. As we believe the proposed merger to be the most significant development in our respective corporate histories, please ensure that your shares are represented at your meeting whether or not you are able to attend. Regardless of the number of shares you own, your vote is important. Why are the Boards of Directors recommending that you vote in favour of the Arrangement? After careful consideration, the Boards of Directors of BC TELECOM and TELUS concluded that the Arrangement is in the best interests of BC TELECOM and TELUS, respectively, and are recommending that their respective shareholders vote FOR the special resolutions approving the Arrangement. The Arrangement brings together Canada's second and third largest domestic telecommunications companies with complementary businesses, objectives and growth strategies. BC TELECOM and TELUS believe that their combined management, technical, operating and financial expertise will enhance the position of BCT.TELUS in the telecommunications industry. The Arrangement and related transactions will provide BCT.TELUS with: · A new platform for national growth, · Significant synergies from consolidation, · A significant increase in scale and scope, providing a strong financial capacity to support future growth opportunities, and · An alliance with GTE Corporation, a telecommunications leader in the provision of voice, data and internet services. In making their recommendations your respective Boards of Directors considered a variety of matters, including the advice of their independent financial advisors. Complete copies of the opinions of the financial advisors are included as appendices to the Joint Management Proxy Circular. What is the effect of the Arrangement on your BC TELECOM shareholdings? Under the terms of the Arrangement, 75% of your BC TELECOM common shares will be exchanged for BCT.TELUS common shares and 25% of your BC TELECOM common shares will be exchanged for BCT.TELUS non-voting shares. In each case your share exchange will be on a one for one basis. Details of the share exchange mechanics are included in the accompanying Joint Management Proxy Circular. What is the effect of the Arrangement on your TELUS shareholdings? Under