The creditors of struggling Canadian mobile operator Mobilicity have approved Telus’ C$380m (US$374m) proposal to acquire the company.
In a statement on 23 May, Mobilicity CEO Stewart Lyons said: “This is a significant step towards final approval…
The creditors of struggling Canadian mobile operator Mobilicity have approved Telus’ C$380m (US$374m) proposal to acquire the company.
In a statement on 23 May, Mobilicity CEO Stewart Lyons said: “This is a significant step towards final approval of the plan through which the business, combined with the financial strength of Telus, can be continued in a way that will benefit our customers and employees.”
The deal still requires court and regulatory approvals, including from the Competition Bureau and Industry Canada, the government’s business ministry. A hearing for court approval has been scheduled for 28 May.
However, Mobilicity said a vote on its recapitalisation plan has been postponed to a date yet to be announced. “Mobilicity plans to pursue an alternative recapitalisation plan only in the event that the Telus acquisition plan does not proceed,” the operator stated.
At the end of April, Mobilicity initiated a restructuring and said it would pursue a sale of the business to repay its outstanding first and second lien debt, and its outstanding unsecured securities.
Shortly after, Telus, one of Canada’s main carriers, struck a deal to buy its smaller and indebted rival.
Telus stands to gain Mobilicity’s 250,000 customers and its 10MHz of AWS spectrum in a number of Canada’s major cities. Mobilicity will use all the proceeds from the sale to pay off debt.
In a statement at the time, industry minister Christian Paradis said: “The government will take the time required to review the proposal carefully. Our government has taken significant action to promote competition in the wireless sector.”
It has been speculated that Industry Canada may say that spectrum belonging to new entrants such as Mobilicity cannot end up in the hands of incumbents, such as Telus. The government is set to rule on what can be done with the spectrum soon.
