Shareholders file an investigation request relating to TVA Group, Quebecor Media and Quebecor

MONTREAL, Dec. 11, 2014 /CNW Telbec/ - Shareholders holding approximately 5.6 million Class B shares of TVA Group Inc. ("TVA"), representing 48% of those held by minority shareholders and 23% of TVA's total equity, today filed an investigation request relating to TVA, Quebecor Media Inc. ("QMI") and Quebecor Inc. ("Quebecor") with the Autorité des marchés financiers ("AMF"). The request refers to numerous material related-party transactions, potential conflicts of interest, and the proposed acquisition of the assets of A.R. Global Vision Ltd. ("Global Vision") and related financing. 

Related-Party Transactions
TVA's operations are subject to a large number of material related-party transactions between it and various entities controlled by QMI and Quebecor. In 2013, these transactions totalled over $110 million and will increase significantly with the French language NHL broadcast rights recently acquired by QMI from Rogers Communications. On July 31, 2014, Quebecor announced the creation of its Media Group whereby TVA's operations were fully integrated with several other businesses belonging to QMI, resulting in a "de facto" acquisition of TVA by QMI without the consent of or without any compensation paid to TVA's minority shareholders.

Conflicts of Interest
Numerous members of senior management of TVA, QMI and Quebecor are employees of all three companies. With the recent creation of Quebecor's Media Group mentioned above, the organizational structure of TVA is blurred to such an extent that it no longer operates as an independent entity. As well, numerous senior managers of TVA hold stock options in QMI, the controlling shareholder of TVA, which creates financial incentives that can pose serious conflicts between the interests of the management of TVA and the interests of its minority shareholders. Given the number and size of related-party transactions between TVA and QMI and Quebecor, the apparent conflicts of interest which can be created by these employee incentive arrangements are significant and potentially prejudicial to TVA's minority shareholders.

Global Vision Acquisition and Related Financing
On November 13, 2014, TVA announced the proposed acquisition of the assets of Global Vision for $118 million. The purchase of film studios, post-production services and rental equipment, seems to have little strategic fit and does not appear to offer meaningful synergies with the broadcasting operations of TVA. It is also materially transformative in nature to TVA, and greatly increases its risk profile. The proposed acquisition also appears to have been motivated by reasons other than good financial business sense including those that have been widely publicized relating to the political desires of Quebecor's controlling shareholder, Pierre Karl Péladeau, and those posted on his Facebook page. Furthermore, this seems to have been confirmed by the report of the Ethics Commissioner of the National Assembly released on December 5, 2014. As well, given the poor financial performance of Global Vision, the purchase price for its assets is grossly inflated and looks to have been calculated to make certain shareholders of Global Vision whole. TVA's Class B shares currently trade at a significant discount to its North American peers, and the proposed financing to fund the acquisition, by way of a $100 million rights issue of Class B shares backstopped by QMI, would result in a material change to TVA's capital structure and massive dilution, and is abusive and coercive towards minority shareholders. The shareholders who filed the request with the AMF have also requested that the board of directors of TVA submit the proposed acquisition and its financing to the approval of a majority of the minority of holders of Class B shares.

About the Shareholders
The shareholders who filed the request with the AMF relating to TVA, QMI and Quebecor comprise portfolio management firms that have long-established track records of patient and successful value investing, and are committed to promoting good corporate governance and protecting their rights as shareholders and those of their clients, and include:

Jarislowsky, Fraser Limited, one of Canada's largest independent investment management firms, has been a leader in advancing good governance, seeking to improve corporate governance for the benefit of all stakeholders. The firm's partners contributed to the founding of the Canadian Coalition for Good Governance (CCGG), the Institute for Governance of Private and Public Organizations (IGOPP) and the Canadian Foundation for Advancement of Investor Rights (FAIR).

Lester Asset Management Inc.

Chou Associates Management Inc.

Coerente Capital Management Inc.

Burgundy Asset Management Ltd.

SOURCE: Lester Asset Management Inc.

Quyn Pham, Director, Marketing & Communications, Jarislowsky, Fraser Limited: 514-842-2727; Stephen Takacsy, Chief Investment Officer, Lester Asset Management Inc.: 514-849-5566