Shaw Communications Inc. significantly enhances its wireless network capabilities

As previously announced, Shaw Communications Inc. (“Shaw” or “the Company”) has entered into a series of transactions that enhance the Company’s long-term growth prospects. “Today represents another important milestone regarding our commitment of becoming Canada’s leading connectivity provider. We believe that both transactions are optimizing the value and strategic positioning of our portfolio of assets and will generate long term benefits for all of our stakeholders, including our employees, customers and shareholders,” said Brad Shaw, Chief Executive Officer, Shaw Communications.

The transactions has announced include a share purchase agreement with GI Partners portfolio company Peak 10 Holding Corporation (“Peak 10”) to sell 100% of Shaw’s wholly-owned subsidiary, ViaWest, Inc. (“ViaWest”), for approximately C$2.3 billion (US$1.675 billion) (the “ViaWest Transaction”). ViaWest provides hybrid IT solutions including colocation, cloud computing and security and compliance for North American enterprises.

Concurrently, Shaw also announced that it has entered into a definitive agreement with Quebecor Media Inc. (“Quebecor”) to acquire 700 MHz and 2500 MHz wireless spectrum licences for $430 million (the “Spectrum Transaction”). The spectrum licences being acquired comprise the 10 MHz licences of 700 MHz spectrum in each of British Columbia, Alberta, and Southern Ontario, as well as the 20 MHz licences of 2500 MHz spectrum in each of Vancouver, Edmonton, Calgary, and Toronto.

“Considering the acquisition of WIND (now Freedom Mobile) in 2016, we now have more synergistic investment opportunities as a leading enhanced connectivity provider within our Canadian footprint,” Mr. Shaw said. “We believe this incremental investment in our wireless business, particularly with the addition of the 700 MHz spectrum, will materially improve our long-term wireless customer experience, and will further enable our ability to offer converged network solutions to our customers.”

“We are excited about our wireless opportunity, and the additional spectrum and network investment will create a compelling wireless experience for our existing and future customers,” Mr. Shaw said. “We are pleased that we have entered into an agreement with Quebecor, and we are excited about putting this spectrum to use for the benefit of Canadians.”

ViaWest Transaction Details

The purchase price of approximately C$2.3 billion (US$1.675 billion), represents an attractive return on Shaw’s original investment of US$1.2 billion, or approximately C$1.3 billion at the prevailing exchange rate at the time. Consideration pursuant to the ViaWest Transaction is comprised of all cash.

Shaw expects to realize net cash proceeds from the ViaWest Transaction of approximately C$900 million after the repayment of ViaWest level indebtedness of approximately US$580 million, repayment of the US$380 million Shaw credit facility borrowings associated with the original investment and subsequent INetU acquisition, and estimated ViaWest Transaction expenses and taxes.

The ViaWest Transaction is subject to customary conditions, including U.S. regulatory approval and is expected to close by the end of fiscal 2017 . The ViaWest Transaction is not subject to a financing condition.

TD Securities Inc. (“TD Securities”) acting as exclusive financial advisor to Shaw, provided an opinion to the Board of Directors of Shaw that, subject to the assumptions, qualifications and limitations provided therein, the consideration to be received by Shaw pursuant to the ViaWest Transaction is fair, from a financial point of view, to Shaw.

Spectrum Transaction Details

The Spectrum Transaction is subject to customary closing conditions and all necessary regulatory approvals from the Ministry of Innovation, Science and Economic Development Canada (“ISED”) and under the Competition Act. The Spectrum Transaction has received all required internal approvals at Shaw and Quebecor and is not subject to approval by the shareholders of Shaw or further approval by the shareholders of Quebecor.

The Spectrum Transaction will be funded using a combination of cash proceeds from the ViaWest Transaction, cash on hand and/or Shaw’s existing credit facility, and is expected to close in the Summer of 2017.

In addition to the spectrum acquisition cost, capital expenditures associated with the deployment of the acquired spectrum are estimated to be approximately $350 million. The Company expects the majority of the capital related to the network build to be incurred during fiscal 20181, which reinforces Shaw’s commitment to the wireless space, and improves our long-term wireless growth prospects.

Additional Details

Shaw’s pro forma net debt to EBITDA leverage metric, assuming closing of both the ViaWest Transaction and the Spectrum Transaction, is expected to be below the low end of our target 2.0x-2.5x, and our $1.5 billion credit facility will be fully undrawn.

Shaw will discuss the ViaWest Transaction and the Spectrum Transaction in conjunction with our third quarter fiscal 2017 results on the previously-scheduled conference call for Wednesday June 28, 2017.

Advisors and Legal Counsel for Shaw

TD Securities acted as exclusive financial advisor and Paul, Weiss, Rifkind, Wharton & Garrison LLP and Dentons Canada LLP provided legal advice with respect to the ViaWest Transaction. Dentons Canada LLP provided legal advice with respect to the Spectrum Transaction.

1 Note: Shaw has an August fiscal year-end.


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