SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
REPORT OF FOREIGN PRIVATE ISSUER
Pursuant to Rule 13a-16 or 15d-16 under
the Securities Exchange Act of 1934
|For the month of: March 2006
||Commission File Number: 1-8481
(Translation of Registrants name into English)
1000, rue de La Gauchetière Ouest, Bureau 3700, Montréal, Québec H3B 4Y7, (514) 870-8777
(Address of principal executive offices)
Indicate by check mark whether the Registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Indicate by check mark whether the Registrant by furnishing the information contained in this Form
is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the
Securities Exchange Act of 1934.
If Yes is marked, indicate below the file number assigned to the Registrant in connection with
Rule 12g3-2(b): 82- .
Notwithstanding any reference to BCEs Web site on the World Wide Web in the documents attached
hereto, the information contained in BCEs site or any other site on the World Wide Web referred to
in BCEs site is not a part of this Form 6-K and, therefore, is not filed with the Securities and
news release contains forward-looking statements. For a description
of the related risk factors and assumptions please see the section entitled Caution Concerning Forward-Looking Statements later in this release.
and Aliant form one of North Americas largest regional
telecommunications service providers
||New regional telecom services provider combines Aliant wireline assets, Bells regional lines trust announced
February 1st and Bells interest in Nordiq
||Consolidated trust to have 3.4 million lines in Ontario, Quebec and Atlantic Canada
||Change will be seamless for customers, no changes in services or prices
||Bell to acquire Aliant Mobility, strengthening its national wireless strategy
||Head office in Atlantic Canada
Saint John, NB and Montréal, QC March 7, 2006 BCE Inc. (TSX, NYSE: BCE) and Aliant Inc. (TSX:
AIT) today announced they are creating one of the largest regional telecommunications service
providers in North America. The companies will combine Bell Canadas wireline operations in its
regional territories in Ontario and Quebec, which BCE announced February 1st would be
converted into an income trust, with Aliants wireline operations and Bells 63.4 per cent interest
in the Bell Nordiq Income Fund (TSX: BNQ.UN) to form a new consolidated income trust. The trust,
which will have 3.4 million local access lines and over 400,000 high-speed Internet subscribers in
six provinces, will be headquartered in Atlantic Canada and controlled by BCE.
Bell will also acquire Aliant Mobility and Aliants DownEast Communications retail outlets as part
of the transaction, strengthening Bells national wireless strategy and bringing consumers in
Atlantic Canada the most advanced networks and faster access to the latest in products and
With a dedicated management team that combines the skills of Bell and Aliant, and with offices in
Atlantic Canada, in Ontario and in Quebec, our customers will benefit from a team located close to
them and focused on their specific regional needs, said Michael Sabia, President and Chief
Executive Officer of BCE. In addition, this larger trust will be able to leverage its size, scale
and greater geographic reach to maintain a high quality telecom infrastructure throughout its
This new entity, which is double the size of the current Aliant, secures a key role for a business
headquartered in Atlantic Canada as a leading provider of wireline communications, including
broadband and the latest in value-added products and services, across eastern Canada and regions of
Ontario and Quebec, said Jay Forbes, President and Chief Executive Officer of Aliant.
The transition to the new consolidated trust will be seamless for all customers of Bell and Aliant.
Customers will continue to enjoy the same products and services, including bundles, and all the
benefits of the Bell and Aliant brands. Products and services will be sold under the Bell and
Sympatico brands within the trust operating territory in Ontario and Québec and the Aliant and
DownEast brands in Atlantic Canada. The Bell Nordiq Income Fund will continue to trade and operate
independently, with no change for its customers or to operations within its territory.
These high quality wireline assets are ideally suited for an income trust structure, as they will
provide stable and predictable cash flows for unit holders. By establishing an income trust
structure, we will generate significant value for our Aliant shareholders and together with Bell,
be able to compete more effectively in the markets that the trust will serve, said Mr. Forbes.
The consolidation we are announcing today is a further evolution in the step-by-step process we
have undertaken to simplify BCEs asset base and surface value for our shareholders, said Mr.
Sabia. By creating an expanded regional service provider, were making efficient use of our
capital and ensuring control of an asset that is core to our business going forward.
Upon closing, BCE will hold a 73.5 per cent indirect interest in the consolidated trust, which it
expects to reduce to approximately 45 per cent through a distribution of units in the trust to BCE
shareholders. At closing, Aliants minority shareholders will exchange their existing common
shares for units of the new trust, retaining a 26.5 per cent interest therein. Through governance
rights, BCE will control the new trust and hence, will continue to consolidate the financial
results of the trust.
The location of the trusts head office will enable it to leverage key elements of Aliants
existing corporate infrastructure to operate the new company. The trust will also establish
regional offices in Ontario and Québec, and will operate in both official languages. Bell will
provide a number of services to the trust on an outsourced basis. No job losses are expected as a
result of the transaction.
On closing, Aliant will contribute all of its operations to a subsidiary of the consolidated trust,
and BCE will contribute its wireline regional operations and its 63.4 per cent interest in Bell
Nordiq Group Inc. to subsidiaries of the trust. In exchange for its contribution, BCE will receive
Aliants wireless business including DownEast retail outlets, and upon completion of the
transaction will own a 73.5 per cent indirect interest in the trust. In addition, approximately
$1.25 billion of BCE debt will effectively be transferred to the trust. BCE currently owns
approximately 53.2 per cent of Aliant.
The distribution by BCE of a portion of its interest to all of its common shareholders will be
effected in conjunction with a reduction of approximately 75 million BCE common shares, or
approximately 8 per cent of BCE common shares outstanding. The transaction is structured so that
the value of the trust units distributed to BCE shareholders is approximately equivalent to the
value of trust units that BCE was anticipating distributing to its shareholders in the context of
the regional lines transaction announced on February 1. BCE will maintain its current dividend of
$1.32 per BCE common share. Following such distribution of trust units and the simultaneous
reduction in the number of BCE common shares outstanding, BCE shareholders will receive annual cash
distributions of approximately $1.40 in combined trust distributions and post-exchange BCE common
Pro forma EBITDA and capital expenditures for the consolidated trust in fiscal 2005 would be
approximately $1.4 billion and $525 million, respectively. It is expected that the trust will take
on incremental debt financing to bring overall leverage to a ratio of approximately 2.0 times debt
to 2005 EBITDA. Pro forma cash available for distribution in fiscal 2005 would have been
approximately $6851 million. Initially, it is expected that the consolidated trust will
pay out approximately 90 per cent of its cash available for distribution to its unitholders.
The trust will be a significant core asset for BCE, with its business closely aligned with that of
Bell Canada for the long term. At closing, Bell and the consolidated trust will enter into a
number of outsourcing and commercial agreements pursuant to which Bell will support over the long
term the operations of the new trust in Ontario and Québec. Similar agreements will be entered
into between the trust and Bell to support Bell wireless operations in Atlantic Canada.
The governance structure of the consolidated trust will be in line with comparable income trust
precedents and will provide, amongst other things, that BCE will retain the ability to nominate a
majority of the Board of Trustees of the trust and of the Board of Directors of the operating
entities of the trust as long as it owns a 30 per cent or more interest in the trust. Also, BCE
will have the ability to veto certain actions of the new trust and its operating entities (approval
of business plan, significant corporate transactions, material changes in business, leverage in
excess of 2.5 times debt to EBITDA, appointment and change of Chief Executive Officer and material
commercial agreements with competitors of BCE) as long as it owns a
20 per cent or more interest in the new
The dividend on Aliants common shares, currently being paid at an annual rate of $1.24 per share,
will be paid quarterly until closing of the transaction. Aliant shareholders who are resident in
Canada and who will exchange their shares of Aliant for trust units will generally realize a
capital gain (or capital loss) equal to the amount by which the fair market value of the trust
units received exceed (or is less than) the cost of their Aliant shares.
The distribution of a portion of BCEs interest in the consolidated trust to its shareholders is
expected to result in a tax deferred distribution to BCE shareholders resident in Canada. The
distributions to U.S. shareholders should not be subject to any Canadian non-resident withholding
tax. However, due to restrictions under the U.S. Investment Company Act, it is anticipated that
non-institutional U.S. shareholders of BCE would receive the net proceeds of the sale of the trust
units, rather than the trust units themselves.
The transaction is expected to close as early as the third quarter of 2006 once all closing
conditions are met, including, without limitation, receipt of: favourable advance income tax
rulings from the Canada Revenue Agency, approval by the Canadian Radio-television and
Telecommunications Commission, an advance ruling certificate from the Competition Bureau,
securities commissions, other applicable regulatory and stock exchange approvals, possible third
party consents on satisfactory terms, approval by Aliants shareholders, and necessary court
approvals, as well as the arranging of satisfactory bank financing. The subsequent distribution of
trust units by BCE is subject to various conditions including approval by BCEs shareholders and
necessary court approvals. Aliant expects to mail relevant proxy materials to its shareholders in
April and to hold its shareholders meeting to approve the transaction in May. The shareholders of
BCE will be asked separately to approve the subsequent distribution of trust units, but this will
not be a condition to the establishment of the new trust. It is expected that such approval will
be sought at BCEs Annual General Meeting to be held on June 7.
The board of directors of Aliant, after receiving legal and financial advice and following the
review and receipt of recommendations from its independent committee of directors and its financial
advisors (including advice and a fairness opinion from Scotia Capital Inc., hired as exclusive
advisor to the Committee, and an independent fairness opinion and valuation from TD Securities
Inc.) unanimously approved the transaction on the basis that it is in the best interests of the
company. The board of directors of Aliant recommends this transaction to its shareholders. BCE was
advised by RBC Capital Markets and Goldman, Sachs & Co.
The trust units of the consolidated trust have not been and will not be registered under the U.S.
Securities Act of 1933 and may not be offered or sold in the United States absent registration or
an applicable exemption from the registration requirement of such Act.
About BCE Inc.
BCE is Canadas largest communications company. Through its 28 million customer connections, BCE
provides the most comprehensive and innovative suite of communication services to residential and
business customers in Canada. Under the Bell brand, the Companys services include local, long
distance and wireless phone services, high-speed and wireless Internet access, IP-broadband
services, information and communications technology services (or value-added services) and
direct-to-home satellite and VDSL television services. Other BCE businesses include Canadas
premier media company, Bell Globemedia, and Telesat Canada, a pioneer and world leader in satellite
operations and systems management. BCE shares are listed in Canada, the United States and Europe.
From its home base in Atlantic Canada, Aliant delivers a wide variety of innovative and traditional
communications services, including local and long distance telephony, wireless, Internet,
e-commerce, interactive multimedia, data and managed network services, to more than two million
consumers and over 80,000 enterprises. Aliant complements its industry-leading telecommunications
business with strengths in information technology solutions and knowledge-services applications.
Aliants approximately 8,400 employees build on its 100-plus year history by collaborating to
deliver the highest quality of customer service, choice, and convenience. Aliant has a market
capitalization of approximately $3.7 billion.
BCE Caution Concerning Forward Looking Statements
Certain statements made in this press release, including, but not limited to, the future financial
condition and results of operations of BCE, Aliant and the new regional lines income trust, the
expectation that the creation of the new trust will provide stable and predictable cash flows for
unitholders, the proposed distribution of trust units to BCE shareholders, BCEs anticipated
remaining interest in the new trust, the tax treatment of BCE and Aliant shareholders, the
expectation that BCE shareholders will receive value from this proposed transaction consistent with
the value BCE anticipated distributing to shareholders in the context of the regional lines
transaction announced on February 1, 2006, the expected increase in the value of distributions to
BCE shareholders, the expected increase in the equity value of the assets involved in the proposed
transaction, the expected seamless nature of the transition to the new trust for customers, the
expected closing date of the proposed transaction and other statements that are not historical
facts, are forward-looking statements and are subject to important risks, uncertainties and
assumptions. In particular, in making these statements, BCE has assumed, among other things, that
the proposed transaction and subsequent distribution by BCE of units in the new trust will receive
the required regulatory and securityholder approvals and that the other conditions to the
transaction can be satisfied in accordance with their terms. The results or events predicted in
these forward-looking statements may differ materially from actual results or events. As a result,
readers are cautioned not to place undue reliance on these forward-looking statements.
Certain of the 2005 pro forma financial results of the new trust have been prepared by management
on the basis of unaudited financial information for the year ended December 31, 2005. The actual
results for the year ended December 31, 2005 may vary from the amounts discussed herein as a result
of year-end adjustments made in connection with the preparation of audited financial statements or
otherwise, and such variation may be material. In addition, the actual results of the new trust in
the future will likely vary from the amounts discussed herein.
The pro forma combined trust cash distribution and BCE common share dividend has been prepared by
management making a number of assumptions including, but not limited to, a reduction of
approximately 8% in the number of BCE common shares outstanding following the proposed transaction,
BCE owning approximately 45% of the new trust after distributing a portion of its interest to BCE
common shareholders on a pro rata basis, pro forma cash available for distribution of approximately
$685 million and the expectation that, initially, the trust will pay out approximately 90% of its
cash available for distribution to its unit holders.
Other factors that could cause results or events related to the proposed transaction to differ
materially from current expectations include, among other things: the fact that the proposed
transaction involves the integration of various operations previously operated independently and
that there can be no assurance that the combined operation resulting from the proposed transaction
will realize the anticipated synergies, or that other benefits expected from the transaction will
be realized; our ability to complete the proposed transaction without adverse effects on the
customers of Bell Canada, Aliant or the new trust; the ability of the trust to make cash
distributions (the trusts financial results and ability to make cash distributions will be subject
to various risks including, without limitation, intensity of competitive activity, general economic
and market conditions, the level of consumer confidence and spending and the demand for, and prices
of, the trusts services, the impact of pending or future litigation or regulatory proceedings, and
the other risk factors applicable to BCE companies).
For additional information with respect to certain of these and other assumptions and risk factors,
please refer to the Safe Harbor Notice Concerning Forward-Looking Statements dated February 1, 2006
filed by BCE with the U.S. Securities and Exchange Commission, under Form 6-K, and with the
Canadian securities commissions. The forward-looking statements contained in this press release
represent our expectations as of March 7, 2006 and, accordingly, are subject to change after such
date. However, we disclaim any intention and assume no obligation to update or revise any
forward-looking statements, whether as a result of new information, future events or otherwise.
Aliant Caution Concerning Forward Looking Statements
This news release contains forward-looking statements. These statements are based on current
expectations and estimates, as of March 7, 2006, about the markets in which we operate and
managements beliefs and assumptions regarding these markets. These statements include, but are not
limited to statements that relate to the future financial condition and results of operations of
Aliant and the new trust, the expectation that the creation of the new trust will provide stable
and predictable cash flows for unitholders, the tax treatment of Aliant shareholders, the expected
seamless nature of the transition to the new trust for customers, the expected closing date of the
the expected quarterly payment of dividends on Aliants common shares until the closing of the
transaction, and other statements that are not historical facts. These statements are subject to
important risks and uncertainties which are difficult to predict and assumptions which may prove to
be inaccurate. Moreover, the proposed transaction involves the integration of two operations
previously operated independently. No assurance can be given that the combined operation resulting
from the transaction will realize anticipated synergies, or that other benefits expected from the
transaction will be realized.
In making these statements, Aliant has assumed, among other things, that the proposed transaction
will receive the required regulatory and shareholder approvals and that the other conditions to the
transaction can be satisfied in accordance with their terms. For additional information regarding
these and other key assumptions and risk factors, please refer to Aliants Notice Concerning
Forward Looking Statements dated January 26, 2006.
Should any factor impact Aliant or the new trust in an unexpected manner, or should assumptions
underlying the forward-looking statements prove incorrect, the actual results or events may differ
materially from the results or events predicted. All of the forward-looking statements made in this
document are qualified by these cautionary statements, and there can be no assurance that the
results or developments anticipated by Aliant will be realized or, even if substantially realized,
that they will have the expected consequences for Aliant. We undertake no obligation to publicly
revise these forward-looking statements to reflect subsequent events or circumstances. Readers
should not place undue reliance on any forward-looking statements, which reflect managements
plans, estimates, projections and views only as of the date hereof.
||Estimated distributable cash of $685 million represents managements estimate and is
calculated by subtracting capital expenditures and interest expense from estimated EBITDA
of approximately $1.4 billion. Distributable cash is an operating performance measure
that is generally used by Canadian income funds as an indicator of financial performance.
Distributable cash is not a recognized measure under Canadian generally accepted
accounting principles and does not have a standardized meaning. Distributable cash as
presented above may not be comparable to similar measures presented by other issuers.
EBITDA does not have any standardized meaning prescribed by Canadian generally accepted
accounting principles. It is therefore unlikely to be comparable to similar measures
presented by other companies. We believe that certain investors and analysts use EBITDA
to measure a companys ability to service debt and to meet other payment obligations, or
as a common valuation measurement in the telecommunications industry.
For further information:
BCE Media Relations
BCE Investor Relations
Aliant Media Relations
Aliant Investor Relations
Call with Financial Analysts
BCE and Aliant will hold a joint teleconference for financial analysts to discuss this announcement
on Tuesday March 7, 2006 at 8:30 a.m. (Eastern). Media are welcome to participate on a listen only
basis. Michael Sabia, President and CEO of BCE and Jay Forbes, President and CEO of Aliant, will
participate in the teleconference.
To participate, please dial 416-641-6105 or 866-696-5895 shortly before the start of the call. A
replay will be available for one week by dialing 416-695-5800 or 1 800-408-3053 (pass code:
3178837#). This teleconference will also be Webcast live and archived for one week on BCEs
website at www.bce.ca and on Aliants website at www.aliant.ca.
Call with the Media
BCE and Aliant will hold a teleconference for media to discuss this announcement on Tuesday March 7, 2006 at 11:00 a.m. (Eastern).
Michael Sabia, President and CEO of BCE and Jay Forbes, President and CEO of Aliant, will participate in the teleconference.
To participate, please dial 514-868-1042 or 1-866-898-9626 shortly before the start of the call. A
replay will be available for one week by dialing 514-861-2272 or 1-800-408-3053 (passcode 3178945#).
TABLE OF CONTENTS
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
||(signed) Siim A. Vanaselja
||Siim A. Vanaselja
||Chief Financial Officer
Date: March 7th, 2006