- Michael Kedar, Chairman, GlobeNet Communications Group Ltd.
GLOBENET COMMUNICATIONS GROUP LIMITED
CAPITAL
TD Securities delivers integrated financial solutions for clients, combining capital raising and strategic advisory services on a coordinated basis to achieve optimal execution. This approach was exemplified in the financings completed for GlobeNet Communications in July 1999.
GlobeNet Communications required US$1 billion to execute its ambitious and aggressive plans to be first-to-market with an international telecommunications link between North and South America. TD Securities delivered for GlobeNet.
| DELIVERING CLIENT SOLUTIONS |
"TD Securities was one of the early investors in our company ... they understood our business plan and had the confidence in our management team to execute successfully. We felt fully confident in entrusting them with the mandate of meeting our huge financing needs for this unique project. They really brought us the benefit of their integrated expertise in all forms of capital raising."
- Michael Kedar, Chairman, GlobeNet Communications Group Ltd.
GLOBENET COMMUNICATIONS GROUP LIMITED
WHAT GLOBENET NEEDED
After completing a subsea fibre optic cable between the US and Bermuda in 1997, GlobeNet Communications targeted South America as a market where government privatization and deregulation of the telecom industry were creating huge growth opportunities.
GlobeNet's first step in expanding to this market was completing financing for its Atlantica Network - a state-of-the-art 22,500 km undersea fibre optic network designed to carry voice, video, Internet and data traffic between the US, Brazil and Venezuela, via Bermuda. Later phases of the project would extend the cable network to Rio de Janeiro and Buenos Aires, and ultimately to Southern Europe and the UK.
WHAT TD SECURITIES DELIVERED
TD Securities' experienced telecommunications team was able to leverage its understanding of the market opportunity in South America and GlobeNet's business plan to accurately assess investor interest in this opportunity. GlobeNet faced a sizeable challenge. They needed to raise a significant amount of capital and the risks associated with the project were inordinately high relative to GlobeNet's size and the scope of the project.
The capital structure, developed by TD Securities, included three key components:
Each component of the financing was structured on an integrated basis to meet the company's objectives within the context of market conditions. Effective marketing to the various investor constituencies allowed TD Securities to maximize investor demand and optimize execution and terms for this financing.
THE RESULT
The strategic value of GlobeNet's network was clearly demonstrated when, in March 2000, 360networks inc. agreed to acquire GlobeNet. TD Securities acted as exclusive financial advisor to GlobeNet on this transaction. Together, GlobeNet and 360networks are creating a state-of-the-art global fibre optic network to meet the increasing global demand for bandwidth.
CAPITAL
CREDIBILITY
Throughout the summer and fall of 1999, TD Securities advised the Independent Committee of BCE Mobile on the acquisition by Bell Canada of the 35% of BCE Mobile it did not already own. TD Securities' role went beyond offering advice. We also prepared and delivered a formal valuation of the common shares of BCE and a fairness opinion regarding the transaction. Shareholders of BCE Mobile overwhelmingly approved the minority buy-in transaction on October 22, 1999.
"The Independent Committee was responsible to the minority shareholders. We needed to choose a financial advisor who had credibility in the marketplace, credibility with investors, and credibility within the telecommunications industry. TD Securities was the obvious choice."
- Paul Godfrey, Chairman of the Independent Committee of BCE Mobile Communications Inc.
BCE MOBILE COMMUNICATIONS INC.
WHAT BCE MOBILE NEEDED
In early May 1999, BCE Inc. indicated to BCE Mobile that, as part of BCE's and Bell Canada's ongoing strategic review, they were considering the acquisition by Bell Canada of the 35% of BCE Mobile that Bell did not already own. The full ownership of BCE Mobile would facilitate the offering of bundled communications services, provide operational efficiencies, and make it easier for Bell Canada and BCE Mobile to pursue a national growth strategy.
The Board of Directors of BCE Mobile formed an Independent Committee to represent the interests of minority shareholders and evaluate any proposal that might be received. The Committee in turn chose TD Securities as their financial advisor.
WHAT TD SECURITIES DELIVERED
TD Securities has an excellent reputation for its understanding of and experience in the telecommunications industry. TD Securities also has a leading Mergers and Acquisitions group with extensive experience advising Independent Committees and providing formal valuations and fairness opinions. This combination of qualifications made TD Securities the clear choice for advising the Independent Committee and delivering a valuation and fairness opinion that would have strong credibility with institutional and retail investors.
After conducting a detailed analysis of BCE Mobile and the wireless industry, TD Securities determined that the fair market value of the common shares of BCE Mobile was in the range of $54.50 to $63.00 per common share. TD Securities advised the Independent Committee throughout its negotiations with BCE and Bell Canada, leading to the minority buy-in proposal at $58.75 cash per common share of BCE Mobile, the mid-point of TD Securities' valuation range. TD Securities also provided a fairness opinion with respect to the transaction.
THE RESULT
Based on TD Securities' advice and valuation expertise, the minority buy-in transaction was supported by the Independent Committee and overwhelmingly approved by the shareholders of BCE Mobile on October 22, 1999.
CAPITAL
INSIGHT
With the assistance of TD Securities, Clearnet Communications Inc. successfully accessed the US capital markets in 1999 for a total of approximately C$500 million through two highly innovative debt transactions. Both issues were structured to provide significant capital to finance Clearnet's aggressive growth plans while ensuring a high degree of financial flexibility and minimizing cost of capital.
"Clearnet's 1999 public high yield debt financings were notable successes in the capital markets. TD Securities demonstrated the ability to successfully identify the opportunities to pursue these transactions as well as to capably manage often complex deal issues under very compressed timelines. We consider these financings as concrete evidence of TD Securities' ability to successfully execute innovative and challenging debt transactions on both sides of the Canada / US border."
- Robert McFarlane, Executive Vice President and Chief Financial Officer, Clearnet Communications Inc.
CLEARNET COMMUNICATIONS INC.
Clearnet Communications Inc. is one of Canada's leading wireless communications companies, with a reputation for innovation and excellence. The Canadian wireless market is experiencing very rapid growth, driven by new technology which fosters increasing utility and functionality of wireless services. As a result, Clearnet is extremely well-positioned to expand and grow its business.
WHAT CLEARNET NEEDED
In 1999, Clearnet required capital in order to finance this rapid growth and maintain a high degree of financial flexibility. Other financing objectives included deferring debt servicing requirements to be consistent with Clearnet's projected cash flow profile, reducing Clearnet's cost of capital and minimizing currency risk. TD Securities executed two highly successful financings which enabled Clearnet to meet these objectives.
WHAT TD SECURITIES DELIVERED
In February 1999, TD Securities lead-managed an offering of Canadian dollar denominated 10.75% Senior Discount Notes for proceeds of approximately $100 million. By accessing investor demand on both sides of the border for Canadian dollar securities, TD Securities enabled Clearnet to achieve its financing objectives on a very efficient basis.
In April 1999, with momentum in the wireless sector continuing, TD Securities identified the opportunity for a follow-up transaction. While the prior transaction had filled demand for a Canadian dollar offering, investor demand for a US dollar offering was also strong. In the context of Clearnet's financing objectives, TD Securities executed an offering of US dollar denominated 10.125% Senior Discount Notes for proceeds of approximately US$256 million. This was executed simultaneously with an innovative cross-currency swap that was syndicated to the high yield underwriting group. As a result, Clearnet was able to efficiently tap US investor demand while achieving Canadian dollar financing at an effective rate of less than 10%.
THE RESULT
In both financings, TD Securities demonstrated its ability to read the market for Clearnet's debt correctly and to back those views aggressively with the capital and execution skills needed to ensure that Clearnet's financing objectives were met.
UNITED PAN-EUROPE COMMUNICATIONS N.V.
In the Summer and Fall of 1999, TD Securities was involved in one of the biggest and most challenging Euro project financings ever done. United Pan-Europe Communications (UPC) required funding for a massive network rollout, upgrades in seven European countries, and further acquisitions. TD Securities co-managed a series of transactions and led several important related derivative trades for UPC. This contributed to the company's successful funding of its capital expenditure program critical to its European strategy.
"We needed to get the best available funding for our European cable expansion. We chose TD Securities as advisor because they had the expertise and credibility to sell our story in Europe, where the financing experience for Euro cable systems is low. We were also confident of their ability to structure transactions that would enable us to access the important leveraged finance market in both Europe and the United States, while ensuring that our liabilities remained substantially in Euros."
- Mark Schneider, Chief Executive Officer, United Pan-Europe Communications N.V.
WHAT UPC NEEDED
UPC was aggressively pursuing its strategy to be the dominant provider of cable in Europe. Throughout 1999, TD Securities acted as financial advisor to UPC to help the company meet its enormous financing requirements to upgrade existing systems to handle two-way video, voice, and Internet signals to residential and commercial subscribers.
UPC wanted to take advantage of the emerging market in Euros, but needed experienced telecom financiers to help gain the confidence of banks, many of which would be extending credit to a European cable operator for the first time. UPC also needed to maximize the amount of high yield debt - a market that has historically been denominated in US dollars - while ensuring that the bulk of its financial liabilities remained in Euros.
WHAT TD SECURITIES DELIVERED
In July 1999, TD Securities co-arranged a Euro 1 billion senior secured project loan, one of the largest Euro loans to date, and delivering to UPC a significant portion of its capital requirement in Euros. The transaction was named "Telecom Deal of the Year" by Project Finance International in recognition of the challenge of the deal and the perceived risks of the project. Subsequently, from July 1999 to January 2000, TD Securities co-managed and structured a 13-tranche US and Euro High Yield financing and raised the equivalent of US$4.1 billion. Integral to the success of the financings were derivative transactions on a major portion of the debt, also structured and executed by TD Securities. The swaps ensured that UPC's dollar liabilities did not create significant repayment risks, given that their functional currency was the Euro. The elimination of currency risk also helped UPC obtain favourable pricing on the debt.
THE RESULT
The financing of UPC's European capital program has been one of the largest in an industry known for its huge financing requirements. TD Securities played a significant role in UPC's 1999 capital raising efforts, helping the company meet its cross-border and cross-currency financing needs effectively and efficiently.
TRITEL PCS, INC.
Throughout 1998 and the winter of 1999, TD Securities acted as financial advisor and underwriter to Tritel PCS, structuring and executing three inter-related financings which totaled close to US$1 billion. This enabled Tritel to finance its ambitious expansion plans, including a joint venture agreement with AT&T which, overnight, established the company as a major presence in the South-Central United States.
"We needed an investment bank that had credibility in wireless communications and could help us raise the large amount of capital needed on top of a relatively small existing business base ... TD Securities delivered."
- William Mounger, Chairman and CEO, Tritel PCS, Inc.
WHAT TRITEL NEEDED
Prior to the creation of Tritel in 1998, the firm's management team operated cellular systems throughout the United States. To develop a stronghold in five states in the South-Central US, the management team combined their licenses with those of AT&T in an aggressive joint venture.
When Tritel was formed, it required US$1.1 billion - an ambitious amount given the fledgling state of the company. Achieving the funding while limiting equity dilution was another key objective for Tritel.
TD Securities approached the credit and capital markets, confident in its ability to convince lenders and institutional investors of the benefits of Tritel's strong management team, its experience in network roll-out and the instant brand recognition to be gained from the AT&T name.
WHAT TD SECURITIES DELIVERED
As financial advisor to Tritel, TD Securities led a three-part financing. Each inter-related element of the deal was structured and timed to satisfy both the capital markets and the licensing terms of the venture with AT&T. The integrated financing included:
In only one year since closing with AT&T, Tritel has become a leading provider of wireless PCS in the South-Central US by successfully launching wireless service to markets representing over seven million pops (measure of population - 1 pop = 1 person). Tritel completed a successful IPO in December 1999 which raised an additional US$244 million for the company.
Recently, Tritel and Telecorp PCS, another AT&T wireless affiliate, agreed to merge. The new company will service 35 million pops and a geographic area stretching from the Great Lakes to the Gulf of Mexico. Valued at over US$10 billion, the combined company will be the fourth largest PCS carrier in the US.
CAPITAL
RESULTS
In early 1999, TD Securities provided the financing which allowed CTV to move quickly to acquire a majority interest in NetStar Communications following a period of major consolidation for the network. TD Securities structured the financing in a way that enabled CTV to make the acquisition, while positioning the network for future acquisitions and expansion.
"When the opportunity to acquire TSN and the Discovery Channel became available in late January 1999, TD Securities demonstrated its understanding of our needs by responding with unprecedented speed and creativity. They got us the capital we needed to make the acquisition and also structured the financing to meet our continuing capital plans."
- Ivan Fecan, President and Chief Executive Officer, CTV
CTV INC.
WHAT CTV NEEDED
When NetStar Communications Inc., owner of TSN, RDS Discovery Channel and Dome Productions went up for sale, CTV turned to TD Securities for advice in the financing of their bid. This acquisition was regarded by both CTV and industry analysts as a unique opportunity for the network to reach its goal of becoming one of Canada's dominant media companies.
The immediate challenge for CTV was to finance its winning bid of $409 million on top of its existing debt level of $250 million. The financing would also have to be structured to provide the company with the flexibility to execute its ambitious growth strategy.
WHAT TD SECURITIES DELIVERED
TD Securities put one of the most experienced Communications teams in the country to work on the CTV deal. In literally three business days, between February 2nd and the 4th, the team structured and underwrote a creative financing package of $800 million consisting of senior and subordinated debt. This provided CTV with the capacity to make the winning bid and refinance its existing debt.
TD Securities' confidence in CTV's business plan and its knowledge and assessment of the capital markets was proven right: the equity and debt markets responded aggressively and quickly to refinance a significant portion of CTV's bank debt.
The first refinancing tranche occurred on March 17th, when TD Securities acted as co-underwriter in a group that provided a "bought" deal for the sale of 15 million common shares at $20.50 for total proceeds of $307.5 million. The market liked the acquisition and the CTV story, and the issue was successfully placed.
The second tranche of refinancing - a $150 million private placement of debentures - was equally successful. TD Securities' structuring and pricing of the issue, along with CTV's strategy, proved to be very attractive to Canadian and US institutional investors.
THE RESULT
By accurately assessing the credit and capital markets and acting decisively, TD Securities met CTV's immediate need for capital to make the acquisition. At the same time, TD Securities ensured a sound capital structure designed for future growth and acquisitions.
CAPITAL
ADVICE
On April 28, 1999 Open Text Corporation successfully raised US$102 million in a financing managed and underwritten by TD Securities. The issue - at the time, the largest ever by a Canadian software company - was supported by existing and new institutional investors. Additionally, the marketed approach helped position the company for future access to capital markets.
"With so many options on how to approach the market, we wanted to ensure that our approach would be in the best long-term interests of the company and its existing shareholders. The breadth of TD Securities' market access, and their strong niche understanding, gave me the confidence I needed to trust in their advice."
- Tom Jenkins, Chief Executive Officer, Open Text Corporation
OPEN TEXT CORPORATION
WHAT OPEN TEXT NEEDED
By early 1999, Open Text, an early and successful entrant in the electronic commerce industry, had a strong following among Canadian and US institutional investors. The Waterloo-based software company was offering state-of-the-art technology, had a broad client base and a reputation for being quick to anticipate and capitalize on e-commerce developments.
Open Text wanted to raise approximately US$68 million, an ambitious amount in light of its market capitalization at the time. There was no doubt that a new equity issue would be viewed favourably by the market.
Open Text's challenge was in reconciling conflicting advice on the best way to access the capital markets. Canadian and US investment dealers were offering wide-ranging views and varying levels of assistance.
WHAT TD SECURITIES DELIVERED
TD Securities had previously established a credible relationship with Open Text management both in Equity Research and Corporate Finance coverage. We guided Open Text through its market access choices. While many investment dealers were recommending a "bought" deal for Open Text because it offered certainty of financing, TD Securities recommended a "marketed" deal - a course of action that could result in a larger, better-priced issue for the company. Equally important, the marketed deal process would also strengthen Open Text's expanding institutional investor base.
TD Securities' recommended approach met with considerable success. As predicted, investors felt confident with Open Text's strategy and were confident in the management team's approach.
On April 23rd, TD Securities commenced marketing an issue of two million shares with the objective of raising a minimum of US$68 million. In an intense two-day period, a team including Open Text CEO Tom Jenkins, TD Securities' institutional sales professionals and the TD Securities' technology research analyst met with many of Open Text's existing major shareholders and a significant number of potential new institutional investors. We explained the company's product plans, capital and acquisition strategy, and sector outlook. The company's prospects excited investors.
The success of the process resulted in Open Text awarding the underwriting group with the option to underwrite an additional one million shares. The option was exercised and by April 28th, five days after the marketing had commenced, Open Text had raised a total of US$102 million at a share price of US$34. The issue was an outstanding success.
THE RESULT
TD Securities' recommended approach enabled Open Text to complete a larger issue at a price higher than believed possible in a "bought" deal. More importantly, TD Securities' advice put the company on a sound footing for future access to capital markets, which is critical for a company in this industry and at this stage of its growth.