Settlement subject to court and regulatory approval
WINNIPEG, Sept. 24, 2014 /CNW/ - Manitoba Telecom Services Inc. (TSX: MBT) (the "Company" or "MTS Allstream") today announced it has reached agreement with its unions and retirees in respect of the implementation of the lawsuit regarding the administration of one of MTS's pension plans, which was the subject of a decision of a Supreme Court of Canada ruling on January 30, 2014 and involved events that occurred in connection with the Company's privatization in 1997.
For the past several months, the Company and advisors have been working closely with its unions and retiree representatives to develop an implementation plan, which was unanimously agreed to today by all parties. The specific arrangements will be communicated to affected MTS defined benefit pension plan members in the coming weeks, and will be subject to court approval following a court hearing scheduled to occur on November 3, 2014 as well as regulatory approval.
"We are pleased to have come to an arrangement that is equitable and fair that everyone has agreed to, and is now subject to the approval of the court," said Pierre Blouin, the Company's Chief Executive Officer. "Going forward, we expect this matter to be resolved and there will be no more uncertainty in respect of our pension plan litigation."
The settlement agreement provides that:
- Total enhanced benefits available under the settlement will equal $140 million as of July 1, 2014. Thereafter the amount will grow at the rate of 2% per annum until court approval
- Of this amount, approximately $30 million will be paid in 2014 or early 2015, by the Company directly to MTS employees who are members of its defined benefit pension plan
- The remaining balance of approximately $110 million will be funded from MTS' defined benefit pension plan, and will be used to pay retirees and other persons with interests in the plan, and also pay expenses associated with the settlement. This amount will be funded by MTS over time and in accordance with federal statutory funding obligations
As a result of today's settlement agreement, if the same is approved by the court on or about November 3, 2014 and other regulatory approvals are obtained, the Company's solvency deficit for all of its pension plans, as at January 1, 2014 would decrease by the $30 million cash funding to $205 million. These remaining deficits will be funded in accordance with the Pension Benefits Standards Act, with no further funding required in 2014, while the amount required in 2015 will be determined by an actuarial valuation on January 1, 2015.
As a result of the Company's $250 million equity financing that closed in December 2013 and the Company's solid cash flows, the Company is expected to have sufficient liquidity to satisfy all of its pension funding obligations, including the obligations in respect of the settlement agreement. "As we have indicated in the past, we were entirely prepared for this scenario and will manage its financial impact while maintaining a strong balance sheet," said Wayne Demkey, Chief Financial Officer.
Affected MTS defined benefit pension plan members will be receiving packages with more detailed information, and will be invited to take part in one of a series of information sessions that will be organized to explain the specific terms of the settlement to affected members. Individuals who do not receive this package can direct their questions to [email protected].
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 13 consecutive years on the Jantzi Social Index for leadership in social responsibility and is the recipient of the 2014 Best Overall Governance Award by the Canadian Society of Corporate Secretaries, recognizing a high level of effectiveness across the three pillars of governance, risk and compliance, and 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 ability to obtain court and regulatory approval from OSFI, the specific time, method, quantum and implementation of any payment obligations as may be determined by the plan's actuaries, 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 in the Company's 2013 Annual MD&A and 2013 Annual Information Form, both 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: Manitoba Telecom Services Inc.