Manitoba Telecom Services Inc. receives Supreme Court of Canada's decision regarding pension lawsuit
WINNIPEG, Jan. 30, 2014 /CNW/ - Manitoba Telecom Services Inc. (TSX: MBT) (the "Company" or "MTS Allstream") today announced the Supreme Court of Canada has reinstated a lower court ruling on a lawsuit regarding the administration of one of MTS's pension plans following the Company's 1997 privatization.
The Company and its outside advisors are reviewing the implications of today's ruling, which is complex and requires further negotiations and discussions including the plaintiffs before the definitive impacts on the MTS pension plan and the Company are known with certainty. Pension benefits are expected to be increased by $43 million, plus interest calculated at a rate equal to the pension plan's rate of return since 1997, which could increase pension benefits in time by up to $147 million. The Company will disclose the specific implementation plan once known.
As a result of a recent equity financing that closed in December 2013 and the Company's strong cash flows, the Company is expected to have sufficient liquidity to satisfy all its pension funding obligations. The Company expects to maintain its current credit rating and continues to generate strong free cash flows, which it expects will be sufficient to fund the Company's cash needs.
"This is a very disappointing outcome, but we were prepared for this scenario and are confident that should we need to make additional pension payments this year, we can fully manage its financial impact while maintaining our long-term strategy for delivering shareholder value," said Wayne Demkey, Chief Financial Officer at MTS Allstream.
"We continue to feel that the Company has complied with all applicable pension law, as well as the provincial legislation that privatized MTS," said Paul Beauregard, Chief Corporate and Strategy Officer & Corporate Secretary at MTS Allstream. "At the time of privatization, the Company viewed its obligation was to implement a pension plan that provided pension benefits equivalent to what existed prior to privatization. We fulfilled that obligation. Benefits today are absolutely identical to what they were at privatization, a fact that everyone has agreed to. Prior to privatization, pension funding was shared with employees on an equal (50/50) basis. Since privatization, the Company has made commitments of approximately $765 million to this MTS Pension Plan, approximately $557 million of which has already been paid in cash. Employee contributions over the same period totaled $163 million. Last year alone, MTS contributed $14 for every dollar contributed by its employees. The bottom line is that plan members have continued to receive a very attractive pension benefit that is in every way equivalent to or, in the Company's view, better than they would have received under the old plan."
The Company will make further remarks in connection with its upcoming release of its annual financial disclosure and associated analyst call, expected to be held on the afternoon of Thursday, February 6, 2014.
A copy of the Court's decision is available on MTS Allstream's website. Please click here to view the decision.
About Manitoba Telecom Services Inc. (MTS Allstream)
MTS Allstream is one of Canada's leading national communication solutions companies, providing innovative communications for the way Canadians live and work today. The company has more than 100 years of experience, with approximately 5,000 employees across Canada. MTS Allstream's business is dynamic and consists of two operating divisions. In Manitoba, MTS is the leading full-service telecommunications provider for residential and business customers.
MTS's suite of services includes the latest in wireless technology, broadband services, IPTV, voice services, home security, and an extensive range of business solutions. Across Canada, Allstream is a leader in IP communications and is the only national provider that focuses exclusively on the business telecommunications market. MTS Allstream has nearly two million customer connections spanning business customers across Canada and residential consumers throughout the province of Manitoba. The Company's extensive national fibre optic network spans more than 30,000 kilometres. MTS Allstream has spent 12 consecutive years on the Jantzi Social Index for leadership in social responsibility and is the recipient of the 2011 Governance Gavel Award from the Canadian Coalition for Good Governance, recognizing clear and effective public disclosure and leading governance practices.
MTS Allstream's common shares are listed on the TSX (trading symbol: MBT). Customers, stakeholders and investors who want to learn more about MTS Allstream are encouraged to visit: www.mtsallstream.com.
Forward-looking Statements Disclaimer
This news release includes forward-looking statements and information (collectively, the "statements") about matters in this news release that are subject to risks, uncertainties and assumptions, including the outcome of the negotiations, the time, method, quantum and implementation of any payment obligations, the Company's future cash flows, liquidity, credit ratings and profitability, and other events that could occur as a result of this decision. As a consequence, actual results in the future may differ materially from any conclusion, forecast or projection in such forward-looking statements. Therefore, forward-looking statements should be considered carefully and undue reliance should not be placed on them. Examples of statements that constitute forward-looking information may be identified by words such as "believe", "expect", "project", "should", "anticipate", "could", "target", "forecast", "intend", "plan", "outlook", "see", "set", "pending", and other similar terms.
Factors that could cause anticipated opportunities and actual results to differ materially include, but are not limited to, matters identified in the "Material assumptions" section and the "Risks and uncertainties" section of the Company's 2012 Annual and Q3 MD&A, 2012 Annual Information Form and short form prospectus dated November 29, 2013, all of which are available on SEDAR at www.sedar.com.
Please note that forward-looking statements reflect Management's expectations as at the date hereof. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
SOURCE MTS AllstreamFor further information: