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Lloyds Bk. 43 | LSE:10NT | London | Medium Term Loan |
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RNS Number:5134E BCE Inc 26 January 2000 BCE SHAREHOLDERS TO GET NORTEL NETWORKS SHARES BCE to focus on communication services Toronto (Ontario) January 26, 2000 - BCE Inc. today announced a plan to distribute an approximate 37% interest in Nortel Networks to the nearly 500,000 shareholders of BCE. As a result of this plan, all current BCE common shareholders will own two securities, have a direct interest in both BCE and Nortel Networks separately, and thus continue to benefit from their ownership in two Canadian high-tech powerhouses. "The distribution of the Nortel Networks shares will begin to unlock significant and sustainable value for BCE shareholders," explained Jean C. Monty, President and CEO of BCE. "Nortel Networks' stellar performance has overshadowed the underlying value of BCE's other assets. In recent months, BCE's stock has been trading significantly below the underlying value of its assets with an estimated discount exceeding $30 billion - the equivalent of approximately $47 per share - which is not being recognized by the financial markets. This transaction will allow the market to more accurately reflect the value of BCE's communications services business consisting of Bell Canada (including Bell Mobility), BCE Emergis, CGI, BCE Media (including Bell ExpressVu and Telesat Canada) and Bell Canada International. With a market valuation that more accurately reflects our true value, we can further grow and expand these businesses in a more cost effective manner for our shareholders, by using our shares as currency for acquisitions." "We enthusiastically support the proposed plan and believe this is a win-win for all Nortel Networks shareholders," said John Roth, President and CEO, Nortel Networks. "It will put us on an equal footing with our peers in that our ownership and stock will be widely held. This will make Nortel Networks even stronger, unleashing us as a truly independent Canadian-based global company focused squarely on the growth engines of the Internet." BCE and Nortel Networks have signed a definitive agreement, which both Boards of Directors have approved, to implement the proposed transaction by way of a plan arrangement. Under the proposed plan, BCE common shareholders will, for each common share of BCE held, receive approximately .78 of a common share of a new publicly traded Canadian company that will own all of the shares of and continue as Nortel Networks. (The final ratio is subject to adjustment, based on the number of BCE common shares outstanding at the time of completion of the transaction.) As part of the plan, all Nortel Networks common shareholders will exchange their current shares of Nortel Networks for common shares of the new company. The exchange will be on a one-for-one basis, so that the shareholders of BCE and the public shareholders of Nortel Networks will together own the common shares of the new public company. Each BCE shareholder will retain the same number of BCE common shares, which will now reflect the remaining interests of BCE's communications services. For example, a shareholder with 100 BCE common shares prior to this transaction will hold 100 BCE common shares and approximately 78 Nortel Networks common shares following the transaction. In aggregate, shareholders will receive an annual common dividend totaling $1.37 per share, $1.20 from BCE and approximately $0.17 (U.S.$0.12) from Nortel Networks. Following this transaction, BCE will retain an approximate 2% interest in Nortel Networks that will be available to fund further growth. "This plan is consistent with BCE's vision to be a leader in providing our customers with a full range of communications, information, e-commerce and entertainment services," Mr Monty added. "Our focus over the past two years has been on building the scope of our operations, particularly the creation of major growth engines such as BCE Emergis and Bell Nexxia, and moving towards a more integrated operating model. Building on our strong continuing base in Canada, we are now positioned to accelerate our growth through the expansion of communications services beyond Canada in selected growth areas. We will continue to build Bell Canada into a truly national communications company and we will intensify our focus on the Internet in all our businesses particularly with Bell Sympatico and BCE Emergis." Today's announcement is a natural result of the evolution of Nortel Networks and BCE. Over the years, BCE's ownership in Nortel Networks has declined from 100% to 39%. Today, there is no longer a strong business rationale for BCE to maintain a significant ownership in Nortel Networks. "BCE is proud to have been instrumental in the development of Nortel Networks into Canada's premier global high-tech leader. As we go forward, we are totally committed to support the development of other BCE companies as we pursue the tremendous growth opportunities presented by the new Internet economy," concluded Mr. Monty. The transaction will be subject to customary conditions, including relevant tax rulings, and approval of the plan of arrangement by the court and the common shareholders of BCE and Nortel Networks. BCE expects the new structure to be in place by the end of the second quarter of 2000. Morgan Stanley Dean Witter is acting as financial advisor to BCE and has provided a fairness opinion to the corporation. BCE has received confirmation from bond rating agencies, including CBRS, DBRS, and Standard & Poor, that current credit ratings will be maintained. In accordance with Canadian tax law, the plan will be executed in a manner that does not result in any taxes to BCE or to its Canadian shareholders, unless they sell the shares being distributed, in which case normal capital gains taxes would apply. The cost basis of current BCE shares held by Canadian shareholders will be proportionately split based on the relative values of BCE and Nortel Networks following the distribution. For U.S. shareholders, this transaction will be treated as a taxable dividend according to U.S. laws. U.S. shareholders are urged to consult their tax or financial advisors in this regard. BCE will continue to be one of Canada's largest companies with revenue exceeding $16 billion, assets of approximately $30 billion and an estimated market value that would rank among the top Canadian companies. Through its operations, BCE provides residence and business customers in Canada with wireline and wireless telecommunications products and applications, satellite communications and direct-to-home television services, systems integration expertise, electronic commerce solutions, Internet access and high-speed data services, and directories. BCE has a presence abroad through Bell Canada International, which provides communications services to nearly 6 million customer in Asia and Latin America, and through Teleglobe, an international telecommunications carrier. BCE shares are listed in Canada, the United States and Europe. Note to Editors: BCE will host a live Webcast news conference to discuss this announcement at 4:15 p.m. EST. To take part in this conference, please visit: www.bce.ca. To participate by audio teleconference, please dial: North America only 1 800 736 2760 International 1 847 619 6446. Password is "RESULTS" The news conference will also be available via satellite feed: 3:30 p.m. to 5:30 p.m. E2C 3B. Note: Certain statements made in this press release, which describe BCE's intentions, expectations or predictions, are forward-looking and are subject to important risks and uncertainties. The results or events predicted in these statements may differ materially from actual results or events. Factors which could cause results or events to differ from current expectations include, among other thing: the impact of rapid technological and market change; general industry and market conditions and growth rates; international growth and global economic conditions, particularly in emerging markets and including interest rates and currency exchange rate fluctuations; unanticipated impact of Year 2000 issues; and the impact of consolidations in the telecommunications industry. For additional information with respect to certain of these and other factors, see the reports on Forms 6-K and 40-F filed by BCE with the United States Securities and Exchange Commission. BCE disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. For further information: Communications Don Doucette On January 26: (514) 214-1809 After January 26: (514) 786-3924 Web site: www.bce.ca Investor Relations Frank Miscio (514)870-2488 Attachments (see charts on BCE web site at: www.bce.ca) A. New ownership structure B. Pro-forma financial highlights C. BCE Communication Services END MSCUNAARRNRAUUR
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