BCE/GLENTEL -- summary under Shares for Shares or Cash

Summary Under
Tax Topics - Public Transactions - Mergers & Acquisitions - Mergers (mostly Plans of Arrangement) - Shares for Shares or Cash
BCE acquisition of GLENTEL for cash and BCE shares
Overview

BCE will acquire GLENTEL under a CBCA Plan of Arrangement for cash or shares, at the GLENTEL shareholder's option, but with the overall consideration fixed at $295.4 million cash and BCE shares equal to 0.4974 of a BCE common share multiplied by 50% of the outstanding GLENTEL common shares. Both a s. 85.1 rollover (for those receiving only shares) and a s. 85 rollover (for those receiving a mixture) is available.

GLENTEL

A provider of wireless communication services listed on the TSX. Thomas Skidmore (the CEO) and A Allan Skidmore (Vice Chairman) hold 21.2% and 15.6% of the common shares.

BCE

Canada's largest communications company listed on the TSX and NYSE.

Plan of Arrangement
  1. Each outstanding option will be deemed to have been vested, with those with a lower exercise price than the "Cash Consideration" described below cash surrendered, and the others cancelled.
  2. Each common share of GLENTEL (other than those held by dissenting shareholders) will be transferred to BCE in consideration for the "Cash Consideration" (of $26.50 per share) or the "Share Consideration" (of 0.4974 of a BCE common share) at the shareholder's option subject to pro-ration based on the aggregate Cash Consideration and Share Consideration being fixed as described above - and with those not electing deemed to have elected the less popular option.
  3. Dissenting shareholders will be deemed to have transferred their GLENTEL shares to BCE.
Canadian tax consequences

A holder who receives only BCE common shares (other than cash in lieu of a fractional share) may defer gain under s. 85.1(1). A holder (including a non-resident holder) who receives both cash and BCE shares will be provided with a signed election form under s. 85(1) (or under s. 85(2) in the case of a partnership), provided the necessary information is provided to BCE within 90 days of the effective date of the Plan of Arrangement. In addition to posting a "Tax Instruction Letter" on its website, BCE will provide the letter to a duly requesting shareholder by email.

U.S. tax consequences

"BCE and GLENTEL do not plan to structure the Arrangement with the intended goal of satisfying [the] requirements" for "tax-free status" and "intend to take the position that the Arrangement is a taxable transaction."