Shaw Communications has entered into an agreement with Rogers Communications to sell its shares in its Hamilton-based cable operations, Mountain Cablevision Limited ("Mountain Cable")
Shaw will also grant to Rogers an option to acquire Shaw's spectrum licenses for advanced wireless service in British Columbia, Alberta, Saskatchewan, Manitoba and Northern Ontario (the "Spectrum Licenses") and to purchase from Rogers its 33.3% partnership interest in the TVtropolis General Partnership ("TVtropolis") under terms of the deal, announced yesterday.
The consideration payable by Rogers to Shaw for Mountain Cable, the Spectrum Licenses and other transactions described below, net of TVtropolis, is approximately $700 million, the company announced, of which (a) $400 million represents the purchase price for the Mountain Cable transaction ($250 million of which is an up-front deposit to be received today), and (b) $50 million represents the purchase price of the option granted by Shaw to Rogers to acquire the Spectrum Licenses (the "Spectrum Option").
The Company acknowledges that the cash consideration to be received by Shaw with respect to Mountain Cable reflects the value of the bundle of transactions taken together, as well as consideration for timing of cash payments between the parties. Shaw is paying $59 million for the remaining interest in TVtropolis and this will be paid today as a deposit. The final option exercise price for the Spectrum Licenses will be settled in connection with the negotiation over the next several months of the provision of certain services, assets or rights by Shaw to Rogers.
"We are pleased to announce this transaction with Rogers,” said Brad Shaw, Chief Executive Officer of Shaw. “The sale is strategic for both parties and Shaw will be able to use the net proceeds from the transactions to accelerate various strategic capital investments in its core business as well as for general corporate purposes. The majority of the proceeds will be reinvested back into our business and will be focused on improving and strengthening our network advantage. Key strategic investments that will be accelerated include the completion of our Calgary data centre, further digitization of our network, additional bandwidth upgrades, expansion of our Wi-Fi network in Western Canada and additional product development relating to Shaw Go and other applications that are focused on an enhanced customer experience. Proceeds from the transactions enable us to realize the benefits of these strategic capital investments sooner than originally contemplated."
The transactions are not conditional on the closing of any of the other transactions and remain subject to customary conditions, including applicable regulatory approvals. The Mountain Cable transaction remains subject to the Canadian Radio-television and Telecommunications Commission and Competition Bureau approvals. The Spectrum Option will be exercisable from the date on which Industry Canada and Competition Bureau approvals permit such exercise and the transfer of the Spectrum Licenses until expiry in March 2015, subject to extension in certain circumstances.
TD Securities Inc. acted as the financial advisor to Shaw in connection with the transactions and Davies Ward Phillips & Vineberg LLP provided legal advice.