Shareholders in US wireless operator MetroPCS will vote on the proposed reverse merger with T-Mobile USA at an EGM on 28 March. The deal was agreed by MetroPCS’ board in October last year, but this month two shareholders criticised the offer, with one…
Shareholders in US wireless operator MetroPCS will vote on the proposed reverse merger with T-Mobile USA at an EGM on 28 March.
The deal was agreed by MetroPCS’ board in October last year, but this month two shareholders criticised the offer, with one of them calling on other shareholders to oppose the transaction.
Under the terms of the transaction MetroPCS shareholders will receive a payment of US$1.5bn in cash and 26% ownership in the combined entity. T-Mobile parent Deutsche Telekom will own the other 74%.
MetroPCS’ special committee has unanimously recommended the offer.
Paulson & Co, a major shareholder with an 8.7% stake in MetroPCS, said it may vote against the proposal. The investor said previously it may be more prudent for MetroPCS to remain independent for the time being and consider alternatives.
P. Schoenfeld Asset Management (PSAM), which holds just over 2% of the stock, firmly opposes the current proposal and has asked other shareholders to vote against the tie-up with the Deutsche Telekom subsidiary.
PSAM has filed preliminary proxy materials with the SEC in a bid to rally support for its objections. Explaining its position, the investor said that the new company was “not appropriately and fairly capitalised” and alleged the interest rate on Deutsche Telekom’s debt financing was “far above market”, based upon PCS/T-Mobile’s anticipated credit rating.
On the announcement of the EGM MetroPCS reiterated its support for the transaction: “We believe that the combined company will have the expanded scale, spectrum and financial resources to compete aggressively with the other larger US wireless carriers.”
MetroPCS released its year end results for 2012 today. It announced total revenues of US$5.1bn – a 5% increase on 2011 – and adjusted EBITDA of over US$1.5bn – an increase of 14% over 2011.
In conjunction with the results CEO Roger Linquist said he expects the reverse merger with T-Mobile USA to close in early April.
The deal would significantly bolster T-Mobile USA’s subscriber base, but it would still leave the carrier as the US’ number four operator behind Verizon Wireless, AT&T and Sprint Nextel.
