SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14D-9
(RULE 14d-101)
SOLICITATION/RECOMMENDATION STATEMENT
UNDER SECTION 14(d)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
Microcell Telecommunications Inc.
(Name of Subject Company)
Microcell Telecommunications Inc.
(Name of Person(s) Filing Statement)
Class A Restricted Voting Shares
Class B Non-Voting Shares, Warrants 2005 and Warrants 2008
(Titles of Classes of Securities)
59501T882, 59501T874, 59501T163, 59501T171
(CUSIP Numbers of Classes of Securities)
Jocelyn Cote, Esq.
Vice President, Legal Affairs
Microcell Telecommunications Inc.
800 de La Gauchetiere Street West, Suite 4000
Montreal, Quebec, H5A 1K3
Canada
(514) 937-2121
(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications on Behalf of the Person(s) Filing Statement)
With Copies to:
David P. Falck, Esq. Marc B. Barbeau, Esq.
Pillsbury Winthrop LLP Stikeman Elliott LLP
1540 Broadway 1155 Rene-Levesque Blvd. West
New York, NY 10036 Suite 4000
(212) 858-1000 Montreal, Quebec H3B 3V2
Canada
(514) 397-3000
Check the box if the filing relates solely to preliminary
communications made before the commencement of a tender offer. [ ]
ITEM 1. SUBJECT COMPANY INFORMATION
Name and Address.
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The name of the subject company to which this Solicitation/Recommendation
Statement on Schedule 14D-9 relates is Microcell Telecommunications Inc., a
Canadian corporation (the "Company" or "Microcell"). The principal executive
offices of the Company are located at 800 de La Gauchetiere Street West, Suite
4000, Montreal, Quebec, Canada H5A 1K3. The telephone number of the Company is
(514) 937-2121.
Securities.
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The titles of the classes of equity securities to which this statement relates
are the Class A Restricted Voting Shares (the "Class A Shares") and the Class B
Non-Voting Shares (the "Class B Shares" and, collectively with the Class A
Shares, together with the associated rights (the "Rights") issued pursuant to
the Company's Shareholder Rights Plan dated as of May 1, 2003, the "Shares"),
including Shares issuable upon the exercise of outstanding options, warrants or
other conversion or exchange rights other than the Rights, as well as the
Warrants 2005 and the Warrants 2008 (collectively, the "Warrants", and together
with the Shares, the "Securities") of the Company. As of May 17, 2004, there
were 199,325 Class A Restricted Voting Shares outstanding, 29,115,989 Class B
Non-Voting Shares outstanding, 3,998,302 Warrants 2005 outstanding and 6,663,943
Warrants 2008 outstanding.
This statement also constitutes the Board's recommendation with respect to the
Offers (as defined herein).
In this Schedule 14D-9, except where otherwise indicated, all references to
"dollars" or "$" are to Canadian dollars.
ITEM 2. IDENTITY AND BACKGROUND OF FILING PERSON
Name and Address of Person filing this Statement.
- -------------------------------------------------
The name, business address and business telephone number of the Company, which
is the person filing this Schedule 14D-9 and is also the subject company, are
set forth in Item 1 above.
Tender Offer of the Offeror.
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This statement relates to a tender offer (the "Offers") by TELUS Corporation, a
corporation incorporated under the Company Act (British Columbia) (the "Offeror"
or "TELUS") as disclosed in a Tender Offer Statement on Schedule TO (the
"Schedule TO") filed by the Offeror with the Securities and Exchange Commission
on May 17, 2004.
As described in the Schedule TO, the Offeror has offered to purchase all of the
outstanding Shares, including any Shares which may become outstanding after the
date of the Offers upon the exercise of outstanding options, warrants or other
rights to purchase Shares and Warrants (other than the Rights), on the basis of
$29.00 for each Class A Share, $29.00 for each Class B Share, $9.67 for each
Warrant 2005 and $8.89 for each Warrant 2008, in each case, net to the seller in
cash, without interest.
As set forth in the Schedule TO, the Offeror maintains its registered office at
Floor 21, 3777 Kingsway, Burnaby, British Columbia and its executive office at
Floor 8, 555 Robson, Vancouver, British Columbia. The telephone number at its
executive office is (604) 697-8044.
With respect to all information described herein as contained in the Offers and
the Schedule TO, including information regarding TELUS or its affiliates,
officers or directors or actions or events with respect to any of them, the
Company takes no responsibility for the accuracy or completeness of such
information or for any failure by TELUS to disclose events or circumstances that
may have occurred and may affect the significance, completeness or accuracy of
any such information.
ITEM 3. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS
Except as described in this statement (including the Exhibits and Annexes
hereto) there are no material agreements, arrangements or understandings or any
actual or potential conflicts of interest between the Company or its affiliates
and: (i) the Company, its executive officers, directors or affiliates or (ii)
the Offeror, its executive officers, directors or affiliates.
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Employment Agreements.
- ----------------------
The Company is a party to employment contracts with Mr. Andre Tremblay, Mr.
Alain Rheaume and Mr. Jacques Leduc which provide that in the event of
termination by the Company without just and sufficient cause, lay-off following
a major change or resignation within 30 days of a major change, they are
entitled to receive an amount equal to two years' base salary, increased by
their target bonus, and to exercise all vested and unvested options to acquire
the Company's shares. However, in the event termination by the Company without
just and sufficient cause or lay-off following a major change occurs after
September 30, 2004, Mr. Leduc is entitled to receive an amount equal to one
year's base salary, increased by his target bonus, which is generally consistent
with the Company's employment arrangements with all of its executive officers in
such circumstances. Mr. Pierre Bonin is entitled to exercise all vested and
unvested options in the case of a layoff or resignation within 30 days following
a major change.
Stock Option Plan.
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With the implementation of the Company's plan of reorganization and of
compromise and arrangement (the "Plan") on May 1, 2003, a stock option plan of
Microcell was adopted.
The purpose of the stock option plan is to provide an opportunity, through
options, for the officers and employees of the Company and its subsidiaries to
purchase Class A Shares, in the case of a Canadian, or Class B Shares, in the
case of a non-Canadian, upon exercise of options granted pursuant to the stock
option plan and thereby participate in the Company's future growth and
development.
The Company's Board of Directors, or if it so resolves, a committee thereof,
administers the stock option plan including the allocation thereof.
Under the stock option plan, the Company has reserved for issuance Class A
Shares and Class B Shares, representing, together with such shares reserved for
issuance in connection with the stock purchase plan, in the aggregate 10% of the
aggregate number of Class A Shares and Class B Shares outstanding immediately
after implementation of the Plan, assuming conversion of all the Company's first
preferred shares and second preferred shares. Options granted under the stock
option plan will have the terms and conditions, including exercise prices,
vesting and expiration, as will be established by the Company's board, from time
to time, provided that the pricing of options will be in accordance with the
requirements of the Toronto Stock Exchange and will not be less than the market
prices for the Class A Shares and Class B Shares at the time of the grant of
options. As at December 31, 2003, 1,781,359 options were granted to the
Company's senior officers and certain of its employees. On May 5, 2004, the
shareholders of the Company approved the increase of the number of Class B
Shares reserved for issuance by 682,235 Class B Shares.
The stock option plan provides that in the event of a take-over bid (as that
term is defined in the Securities Act (Quebec)) for all of the Shares or the
sale or disposition of all or substantially all of the property and assets of
the Company, which would include the Offers, the Board may make such provision
for the protection of the rights of the participants in the stock option plan as
the Board in its discretion considers appropriate in the circumstances,
including changing the date on which any option thereunder vests and/or the date
on which any option thereunder expires.
The rules of the stock option plan also provide that all options thereunder
shall vest in the event that the participant's service or employment is
terminated without cause within 18 months following a change in control of the
Company. The Offers, if consummated, would constitute a change in control of the
Company under the stock option plan.
ITEM 4. THE SOLICITATION OR RECOMMENDATION
Solicitation/Recommendation.
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AFTER CAREFUL REVIEW AND ANALYSIS OF THE OFFERS PERFORMED WITH THE ASSISTANCE OF
ITS LEGAL AND FINANCIAL ADVISORS, THE BOARD RECOMMENDS THAT HOLDERS OF THE
COMPANY'S SECURITIES NOT TENDER INTO THE OFFERS.
A form of a press release communicating the recommendation of the Board of
Directors is filed as Exhibit (a)(5)(ii) hereto and is incorporated herein by
reference.
Background of the Offer; Reasons for Recommendation.
- ----------------------------------------------------
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On May 13, 2004, Mr. Andre Tremblay, the President and Chief Executive Officer
of the Company, met with Mr. George Cope, an Executive Vice-President of the
Offeror and President and Chief Executive Officer of TELUS Mobility, a business
segment of the Offeror. Mr. Cope informed Mr. Tremblay that the Offeror intended
to commence the Offers. Prior to this meeting there had been no discussions
between the Offeror and Microcell regarding a possible business combination or
possible offer by the Offeror for the Securities.
In reaching its determination, the Board has relied on the following factors,
among others:
o The opinions dated May 19, 2004 of its financial advisors, J.P. Morgan
Securities Inc. and N M Rothschild & Sons Canada Securities Limited, to
the Board to the effect that, as of that date and based upon and subject
to the matters stated in their respective opinions, the consideration
being offered to the holders of the Securities was inadequate, from a
financial point of view, to such holders. These opinions are attached
hereto as Annexes A and B, respectively.
o Concerns about the significant conditions the Offeror has placed on its
Offers, including but not limited to the issuance of a "No Action"
letter by the Commissioner of Competition and relief from Industry
Canada's policy with respect to Spectrum Cap limitations. If the
conditions to the Offers are not met or waived by the Offeror, then the
Offeror would be under no obligation to take up and pay for the
Securities under its Offers.
o The possibility that other bidders may be willing to make a more
attractive offer than the Offeror. The Company has been contacted by
other parties that have indicated their interest in pursuing discussions
that could result in competing bids or other transactions. The Company
intends to hold discussions with any other interested parties that may
emerge.
Intent to Tender.
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To the best knowledge of the Company, none of the Company's executive officers,
directors, affiliates or subsidiaries currently intends to tender Securities
held of record or beneficially owned by such person for purchase pursuant to the
Offers.
ITEM 5. PERSON/ASSETS RETAINED, EMPLOYED, COMPENSATED OR USED
Except as set forth in this Item 5, neither Microcell nor any person acting on
its behalf has employed, retained or agreed to compensate any person to make
solicitations or recommendations to holders of the Company's Securities
concerning the Offers.
The Board of Directors has retained J.P. Morgan Securities Inc. and J.P. Morgan
Securities Canada Inc. (collectively "JPMorgan") and N M Rothschild & Sons
Canada Securities Limited ("Rothschild") as its financial advisors
(collectively, the "Financial Advisors") in connection with, among other things,
the Company's analysis and consideration of, and response to, the Offers.
The Financial Advisors have entered into engagement letters which provide for
similar fee structures payable to them. The Financial Advisors will be paid
customary fees for such services, portions of which were payable upon execution
of their respective engagement letters by the Company and upon delivery of their
respective opinions, respectively, which fees will be credited against the
Independence Fees and the Transaction Fees (as hereinafter defined). Each of the
Financial Advisors will be paid an additional fee on May 14, 2005 if the Offers
are not consummated by reason of their non-acceptance or approval by the
Company's securityholders, and, if, as of such date, no person or group has
acquired beneficial ownership of more than 50% of the then outstanding common
stock and more than 50% of the aggregate ordinary voting power of the Company
(the "Independence Fees"). Each of the Financial Advisors will also be paid an
additional fee (the "Transaction Fees"), the amount of which may vary as a
function of the value of the transaction (but which shall in no event be less
than the Independence Fees), if certain transactions (each, a "Transaction") are
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consummated or an agreement is entered into which subsequently results in a
consummated Transaction during the term of its engagement letter or at any time
until May 14, 2005. For purposes of its engagement letter, a Transaction
includes (i) the Offers and any proposed transaction involving the Company and
the Offeror, (ii) any merger, sale, acquisition, divestiture, joint venture or
other business combination of or by the Company or any sale by the Company of
newly issued shares of capital stock of the Company, with or to any third party
other than the Offeror, and/or (iii) any repurchase by the Company of a
significant amount of its securities, any recapitalization of the Company, or
any spin-off, split-off or other extraordinary dividend of cash, securities or
other assets to shareholders of the Company. In no circumstance will the
Independence Fees and the Transaction Fees both become payable.
In addition, the Financial Advisors will be reimbursed for their reasonable
out-of-pocket expenses (including certain fees and disbursements of their legal
counsel), and the Financial Advisors and certain related persons will be
indemnified against certain liabilities arising out of or in connection with the
engagement, including the delivery of their opinions. Certain of JPMorgan's
affiliates own approximately 4.5% of the outstanding capital stock of the
Company, and certain of JPMorgan's affiliates are creditors of the Company and
act as agent for certain of the Company's lenders, for which JPMorgan has
received and continues to receive compensation. In addition, JPMorgan and its
affiliates have, in the past, provided financial advisory services to TELUS, for
which JPMorgan received compensation, and certain of JPMorgan's affiliates are
creditors of TELUS, for which JPMorgan has received and continues to receive
compensation. In the ordinary course of JPMorgan's businesses, JPMorgan and its
affiliates may actively trade the debt and equity securities of the Company or
TELUS for their own account or for the accounts of customers and, accordingly,
JPMorgan may at any time hold long or short positions in such securities.
Rothschild and certain of its affiliates are currently engaged to provide
financial services to the Company and may in the future be engaged to provide
financial services to the Company and/or to TELUS in the ordinary course of
their business, for which services they have received and may in the future
receive customary compensation. In the ordinary course of business, Rothschild
and its affiliates may actively trade or hold securities of the Company and
TELUS for their own account or for the account of customers and, accordingly,
may at any time hold a long or short position in such securities.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY
No transactions in the Shares have been effected during the past sixty days by
the Company or any subsidiary of the Company or, to the knowledge of the
Company, by any executive officer, director or affiliate of the Company, except
as follows:
On April 30, 2004, the Company issued 4,519,636 Class B Shares at a purchase
price of $22 per share pursuant to a rights offering (the "Rights Offering"),
for proceeds to Microcell of approximately $99,431,992, before deducting
expenses of approximately $2 million. This rights offering was qualified by
prospectus in each of the provinces of Canada and was offered to "qualified
institutional buyers" within the meaning of Rule 144A under the U.S. Securities
Act of 1933, as amended (the "1933 Act") or institutional "accredited investors"
within the meaning of Rule 501(a)(1), (2), (3) or (7) under the 1933 Act in the
United States in transactions exempt from the registration requirements of the
1933 Act.
The Company's Chairman, Andre Bureau, received 1,900 rights pursuant to the
Rights Offering. On April 30, 2004, following the exercise of these rights, the
Company issued to Mr. Bureau 385 Class B Shares at a purchase price of $22 per
share. The Company's Chief Executive Officer, Andre Tremblay, indirectly
received 9 rights pursuant to the Rights Offering, and purchased one additional
5
right on the open market for $0.25. On April 30, 2004, following the exercise of
these rights, the Company issued to Mr. Tremblay 2 Class B Shares at a purchase
price of $22 per share.
Mr. Charles Sirois indirectly received 5,655 rights pursuant to the Rights
Offering. On April 28, 2004, Mr. Sirois assigned 1,900 of these rights to
Capital Communications CDPQ Inc., in accordance with the terms of a pre-existing
agreement for consideration of $1. Mr. Sirois did not exercise the balance of
his rights.
As of May 1, 2004, all preferred shares that were outstanding as at 5:00 p.m.
(Montreal time) on April 30, 2004, were redeemed by Microcell at a price of
$16.39 per preferred share, for total consideration of approximately $1.2
million, pursuant to a notice of redemption mailed by the Company to holders of
all its classes of preferred shares on April 7, 2004. Following the redemption
of preferred shares, Microcell had a total of 29,315,314 shares issued and
outstanding as of May 1, 2004, composed of 235,961 Class A Voting Shares and
29,079,353 Class B Non-Voting Shares. The Company's preferred shares were
delisted from the Toronto Stock Exchange at the close of business on April 30,
2004.
On May 3, 2004, the Company issued an aggregate of 2,272,727 additional Class B
Shares to COM Canada, LLC, a private holding company of Craig O. McCaw ("COM
Canada") and to COM Canada LLC Irrevocable Trust of 2004, at the same price as
under the Rights Offering, pursuant to a standby purchase agreement (the
"Standby Purchase Agreement").
On May 3, 2004, the Company also issued 3,977,272 warrants to COM Canada to
acquire, at a price of $22.00 per share, additional Class Shares for exercise at
a later date, pursuant to the Standby Purchase Agreement.
ITEM 7. PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS
Except as set forth in this Schedule 14D-9, the Company is not engaged in any
negotiation in response to the Offers which relates to or would result in (i) a
tender offer for or other acquisition of securities of the Company by the
Company, any subsidiary of the Company, or any other person; (ii) an
extraordinary transaction, such as a merger, reorganization or liquidation,
involving the Company or any subsidiary of the Company; (iii) a purchase, sale
or transfer of a material amount of assets of the Company or any subsidiary of
the Company; or (iv) a material change in the present dividend rate or policy,
or indebtedness or capitalization of the Company.
The Company has been contacted by other parties that have indicated their
interest in pursuing discussions that could result in competing bids or other
transactions. The Company intends to hold discussions with any other interested
parties that may emerge.
Except as described in this Schedule 14D-9, there are no transactions, Board of
Directors' resolutions, agreements in principle or signed contracts in response
to the Offers that relate to or would result in one or more of the events
referred to above.
ITEM 8. ADDITIONAL INFORMATION
FORWARD-LOOKING STATEMENTS
This Schedule 14D-9 contains forward-looking statements, as defined in the
Private Securities Litigation Reform Act of 1995, that are based on expectations
and estimates. Forward-looking statements may be identified by the use of
forward-looking terminology such as believe, intend, may, will, expect,
estimate, anticipate, continue or similar terms, variations of those terms or
the negative of those terms. Statements that are not historical facts, including
statements about our beliefs and expectations, are forward-looking statements.
These statements contain potential risks and uncertainties, and actual results
may therefore differ materially. Except for our ongoing obligations to disclose
material information under the federal securities laws, we undertake no
obligation to publicly update any forward-looking statements whether as a result
of new information, future events or otherwise.
Important factors that may affect these expectations include, but are not
limited to: changes in the Canadian economy and in Canadian and U.S. capital
markets; changes in competition in our markets; advances in telecommunications
technology; changes in the telecommunications regulatory environment; future
litigation; availability of future financing; unanticipated changes in expected
growth of the number of subscribers; radio emission concerns; exchange rate
fluctuations; penetration and churn rates; the mix of products and services
offered in our markets; whether competing bids or other transactions emerge;
whether the conditions of any proposed transaction are met; and other factors
discussed herein and those detailed from time to time in the Company's filings
with the Securities and Exchange Commission. You should evaluate any statements
in light of these important factors.
6
ITEM 9. EXHIBITS
EXHIBIT INDEX
Exhibit No. Exhibit Name
----------- ------------
(a)(5)(i) Press Release issued by Microcell Telecommunications Inc.
on May 13, 2004.
(a)(5)(ii) Press Release issued by Microcell Telecommunications Inc.
on May 20, 2004.
(e) None.
(g) None.
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that the
information set forth in this statement is true, complete and correct.
MICROCELL TELECOMMUNICATIONS INC.
By: /s/ Jacques Leduc
--------------------------------------------
Name: Jacques Leduc
Title: Chief Financial Officer and Treasurer
Dated: May 20, 2004
8
Annex A
[JP Morgan Letterhead]
May 19, 2004
The Board of Directors
Microcell Telecommunications Inc.
800 de La Gauchetiere Street West
Suite 4000
Montreal, Quebec
H5A 1K3 Canada
Members of the Board of Directors:
On May 17, 2004, TELUS Corporation ("TELUS") commenced tender offers for all
outstanding Class A restricted voting shares (the "Class A Shares") and Class B
non-voting Shares (the "Class B Shares") of Microcell Telecommunications Inc.
(the "Company") for a purchase price of $29.00 per share (the "Share
Consideration"), and for all outstanding Warrants 2005 and Warrants 2008
(collectively, the "Warrants") of the Company for a purchase price of $9.67 per
Warrant 2005 and $8.89 per Warrant 2008 (collectively, the "Warrant
Consideration," and together with the Share Consideration, the "Consideration"),
upon the terms and subject to the conditions set forth in the Offers to Purchase
dated May 17, 2004, of TELUS (the "Offers to Purchase"), the accompanying
take-over bid circular (the "Circular") and the related Letters of Acceptance
and Transmittal (collectively, the "Offers"). The Offers to Purchase and
Circular further provide that if the Offers are completed, TELUS intends to
acquire any Class A Shares, Class B Shares and Warrants not tendered in the
Offers at the same price per share pursuant to a compulsory acquisition under
the Canada Business Corporations Act or a Subsequent Acquisition Transaction (as
defined in the Circular).
You have requested our opinion as to whether the Consideration being offered to
the holders of Class A Shares, Class B Shares and Warrants pursuant to the
Offers is adequate, from a financial point of view, to such holders.
In arriving at our opinion, we have (i) reviewed the Offers to Purchase, the
Circular and the related Tender Offer Statement on Schedule TO filed by TELUS
with the U.S. Securities and Exchange Commission and Canadian securities
regulators; (ii) reviewed certain publicly available business and financial
information concerning the Company and the industries in which it operates;
(iii) reviewed certain publicly available business and financial information
concerning TELUS; (iv) compared the proposed financial terms of the Offers with
the publicly available financial terms of certain transactions involving
companies we deemed relevant and
the consideration received for such companies; (v) compared the financial and
operating performance of the Company with publicly available information
concerning certain other companies we deemed relevant and reviewed the current
and historical market prices of the Class A Shares, Class B Shares and Warrants
and certain publicly traded securities of such other companies; (vi) reviewed
certain internal financial analyses and forecasts prepared by the management of
the Company relating to its business; and (vii) performed such other financial
studies and analyses and considered such other information as we deemed
appropriate for the purposes of this opinion.
In addition, we have held discussions with certain members of the management of
the Company with respect to the Offers, and the past and current business
operations of the Company, the financial condition and future prospects and
operations of the Company, and certain other matters we believed necessary or
appropriate to our inquiry.
In giving our opinion, we have relied upon and assumed, without independent
verification, the accuracy and completeness of all information that was publicly
available or was furnished to us by the Company or otherwise reviewed by us, and
we have not assumed any responsibility or liability therefor. We have not
conducted any valuation or appraisal of any assets or liabilities, nor have any
such valuations or appraisals been provided to us. In relying on financial
analyses and forecasts provided to us, we have assumed that they have been
reasonably prepared based on assumptions reflecting the best currently available
estimates and judgments by management as to the expected future results of
operations and financial condition of the Company to which such analyses or
forecasts relate. We have relied as to all legal matters relevant to rendering
our opinion upon the advice of counsel.
Our opinion is necessarily based on economic, market and other conditions as in
effect on, and the information made available to us as of, the date hereof. It
should be understood that subsequent developments may affect this opinion and
that we do not have any obligation to update, revise, or reaffirm this opinion.
We are expressing no opinion herein as to the price at which the Class A Shares,
Class B Shares and Warrants will trade at any future time.
We are acting as financial advisor to the Company in connection with the Offers
and related matters and will receive a fee from the Company for our services
whether or not the Offers are consummated, including a fee payable upon delivery
of this opinion. Please be advised that certain of our affiliates own
approximately 4.5% of the outstanding capital stock of the Company, and that
certain of our affiliates are creditors of the Company and act as agent for
certain of the Company's lenders, for which we have received and continue to
receive compensation. In addition, we and our affiliates have, in the past,
provided financial advisory
2
services to TELUS, for which we received compensation, and certain of our
affiliates are creditors of TELUS, for which we have received and continue to
receive compensation. In the ordinary course of our businesses, we and our
affiliates may actively trade the debt and equity securities of the Company or
TELUS for our own account or for the accounts of customers and, accordingly, we
may at any time hold long or short positions in such securities.
On the basis of and subject to the foregoing, it is our opinion as of the date
hereof that the Consideration being offered to the holders of Class A Shares,
Class B Shares and Warrants pursuant to the Offers is inadequate, from a
financial point of view, to such holders.
This letter is provided to the Board of Directors of the Company in connection
with and for the purposes of its evaluation of the Offers. This opinion does not
constitute a recommendation to any securityholder of the Company as to whether
or not any securityholder should tender Class A Shares, Class B Shares or
Warrants pursuant to the Offers. This opinion may not be disclosed, referred to,
or communicated (in whole or in part) to any third party for any purpose
whatsoever except with our prior written approval; provided, however, that this
opinion may be reproduced in full as an annex to the Solicitation/Recommendation
Statement on Schedule 14D-9 to be filed by the Company with the Securities and
Exchange Commission with respect to the Offers or in any directors circular
mailed to securityholders of the Company.
Very truly yours,
/s/ J.P. MORGAN SECURITIES INC.
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Annex B
[Rothschild Letterhead]
May 19, 2004
The Board of Directors
Microcell Telecommunications Inc.
800 de La Gauchetiere Street West
Suite 4000
Montreal, Quebec H5A 1K3 Canada
To the Members of the Board of Directors:
We understand that the board of directors (the "Board" or "you") of Microcell
Telecommunications Inc. (the "Company") has been asked to consider a take-over
bid (the "Offers") by TELUS Corporation ("TELUS") to purchase for cash all of
the outstanding Class A Restricted Voting Shares, Class B Non-Voting Shares,
Warrants 2005 and Warrants 2008 of the Company (collectively the "Securities")
on the basis of CDN$29.00 per Class A Restricted Voting Share, CDN$29.00 per
Class B Non-Voting Share, $9.67 per Warrant 2005 and $8.89 per Warrant 2008 (the
"Consideration"), the whole as more fully described in the take-over bid
circular and related documents (collectively the "Circular") dated May 17, 2004
(the "Proposed Transaction").
In light of the Offers, you have requested our opinion as to whether the
Consideration is adequate or inadequate from a financial point of view to the
holders of Securities.
SCOPE OF REVIEW
In arriving at our opinion set forth below, we have, among other things:
i) reviewed the Circular and the related Tender Offer Statement on Schedule TO
filed by TELUS with the U.S. Securities and Exchange Commission;
ii) reviewed certain publicly available business and financial information
concerning the Company and the industries in which it operates that we
deemed to be relevant;
iii) reviewed certain publicly available business and financial information
concerning TELUS that we deemed relevant;
iv) compared the proposed financial terms of the Proposed Transaction with the
publicly available financial terms of certain transactions involving
companies we deemed relevant and the consideration received in such
transactions;
v) compared the financial and operating performance of the Company with
publicly available information concerning certain other companies we deemed
relevant, including data relating to public market trading levels and
implied multiples for comparable acquisition transactions;
Board of Directors
May 19, 2004
Page 2
vi) reviewed the current and historical market prices of the Securities of the
Company and compared them with those of certain publicly traded securities
of such other companies that we deemed relevant;
vii) reviewed certain internal financial analyses and forecasts prepared by the
management of the Company relating to its respective business; and
viii) performed such other financial studies and analyses and considered such
other information as we deemed appropriate for the purposes of this
opinion.
In addition, we have held discussions with certain members of management of the
Company with respect to the Proposed Transaction, and the past and current
business operations of the Company, the financial condition and future prospects
and operations of the Company, and certain other matters we believed necessary
or appropriate to our inquiry.
ASSUMPTIONS AND LIMITATIONS
In giving our opinion, we have relied upon and assumed, without independent
verification, the accuracy and completeness of all information that was publicly
available or was furnished to us by the Company, their respective associates,
affiliates and advisors, or otherwise reviewed by or for us, and we have not
assumed any responsibility or liability therefore. We have not conducted any
valuation or appraisal of any assets or liabilities, nor have any such
valuations or appraisals been provided to us. In addition, we have not assumed
any obligation to conduct any physical inspection of the properties of the
facilities of the Company. In relying on financial analyses and forecasts
provided to us or discussed with us by the Company, we have assumed that they
have been reasonably prepared based on assumptions reflecting the best currently
available estimates and judgments by the Company's management as to the expected
future results of operations and financial condition of the Company to which
such analyses or forecasts relate. We have relied as to all legal matters
relevant to rendering our opinion upon the advice of counsel. We have also
assumed that the Proposed Transaction will be completed substantially in
accordance with the terms of the Offers without any material modification or
waiver.
Our opinion is necessarily based on securities markets, economic, financial and
other general business and financial conditions as they exist and can be
evaluated on, and the information made available to us as of the date hereof and
the conditions, prospects, financial and otherwise, of the Company, and its
subsidiaries and affiliates, as they were reflected in the information provided
to us and as they were represented to Rothschild in discussions with management
of the Company. We are expressing no opinion herein as to the price at which the
Securities will trade at any future time. Our opinion is limited to the
adequacy, from a financial point of view, to the holders of the Securities, of
the Consideration in the Proposed Transaction and we express no opinion as to
any underlying decision which the Company may make to engage in the Proposed
Transaction or any alternative transaction.
We are acting as financial advisor to the Company with respect to the Proposed
Transaction and will receive a fee from the Company for our services, part of
which is payable upon the delivery of this opinion to the Company, whether or
not the Proposed Transaction is consummated. Please be advised that we are
currently engaged to provide financial advisory services to the Company and we
or our affiliates may in the future provide financial services to the Company
and/or TELUS in
Board of Directors
May 19, 2004
Page 3
the ordinary course of our businesses from time to time and may receive fees for
the rendering of such services.
This opinion is provided for the benefit of the Board of the Company in
connection with and for the purposes of its evaluation of the Proposed
Transaction. This opinion does not constitute a recommendation to any holders of
the Securities of the Company as to whether such holder of the Securities should
tender in the Offers or how such holders of the Securities should vote with
respect to the Proposed Transaction or any other matter should the Proposed
Transaction or any other matter come to a vote of the securityholders of the
Company. In addition, you have not asked us to address, and this opinion does
not address, the adequacy to, or any other consideration of, the holders of any
class of securities, creditors or other constituencies of the Company, other
than the holders of the Securities. This opinion may not be disclosed, referred
to, or communicated (in whole or in part) to any third party for any purpose
whatsoever except with our prior written approval or as we have otherwise agreed
to in writing. This opinion may be referred to in any press release regarding
the Offers or reproduced in full in any directors circular mailed to holders of
Securities or as an annex to the Solicitation/Recommendation Statement on
Schedule 14D-9 to be filed by the Company with the Securities and Exchange
Commission with respect to the Offers.
Rothschild believes that its analysis must be considered as a whole and that
selecting portions of the analysis or the factors considered by it, without
considering all factors and analysis together, could create a misleading view of
the process underlying the opinion. The preparation of an opinion of this nature
is a complex process and is not necessarily susceptible to partial analysis or
summary description. Any attempt to do so could lead to undue emphasis on any
particular factor or analysis.
This opinion is given as of the date hereof and, although we reserve the right
to change or withdraw this opinion if we learn that any of the Information that
we relied upon in preparing this opinion was inaccurate, incomplete or
misleading in any material respect, we disclaim any obligation to change or
withdraw this opinion, to advise any person of any change that may come to our
attention or to update this opinion after today.
OPINION
On the basis of and subject to the foregoing and such other matters as we
considered relevant, it is our opinion as of the date hereof that the
Consideration in the Proposed Transaction is inadequate, from a financial point
of view, to the holders of the Securities.
Very truly yours,
/s/ N M Rothschild & Sons Canada Securities Limited