The proposed CAD380 million (USD367 million) takeover of financially-struggling Canadian cellco Mobilicity by larger rival Telus cleared its first hurdle yesterday when more than two-thirds of Mobilicity’s debt holders approved the sale plan, following which Telus and Mobilicity will seek court approval for the transaction. The deal is by no means assured though, as it requires permission from authorities including the Competition Bureau and telecoms ministry Industry Canada, which must decide whether to bend the existing rules on large incumbents taking over new wireless entrants.
Mobilicity also announced that a vote on a recapitalisation plan which had been set for 21 May has been postponed and will go ahead only in the event of the Telus acquisition being blocked.
Mobilicity revised certain terms of its sale plan late on Wednesday night after consulting stakeholders ahead of the following day’s vote, and said it ‘received approval from the vast majority of debt holders’, although it did not reveal any details of voting, the Globe & Mail reported. Private equity firm Catalyst Capital, which owns roughly 30% of Mobilicity’s senior secured notes, had previously indicated it would oppose the cellco’s restructuring plans, while it was also aiming to negate a CAD75 million loan facility agreed by the operator.
Meanwhile, a fellow Canadian cellco, Wind Mobile – itself currently up for sale – attempted to cash in on the news with a limited offer aimed specifically at Mobilicity’s roughly 250,000 customers, who can receive one month’s free service and a free SIM card for porting to Wind; the promotion ends 10 June, the target date for completing the Telus-Mobilicity transaction.