BCE scraps income trust plan, ploughs ahead with restructuring

13 Dec 2006

Canada’s largest telecoms group BCE has cancelled a plan to convert itself into an income trust, six weeks after the Canadian government announced it would change the way it taxed income trusts from next year. The move mirrors a similar u-turn by rival telco TELUS Corp late last month. BCE, the parent company of Bell Canada, announced that it still intends to move ahead with the elimination of its existing holding structure. Under BCE’s restructuring plan, holders of Bell Canada preferred shares will be asked to exchange their shares for BCE preferred shares with the same series rights, whilst receiving a one-time special dividend of CAD0.2 per share. At its next annual shareholders meeting, the company will change its name to Bell Canada Inc and regroup its structure into two operating businesses: Bell and Bell Aliant Regional Communications. ‘This new business and financial model allows us to invest significantly in growth platforms and to share our progress with shareholders’, said chief executive Michael Sabia.

On 31 October, Canadian Finance Minister Jim Flaherty announced that the government would tax the cash distributions of new income trusts to try to level the playing field with firms that pay regular corporate income taxes.

Canada,BCE (old), Bell Canada Enterprises (BCE),

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