Stockwatch Daily

Alignvest to combine with Trilogy Int’l as QA

- Mr. Andre Mousseau reports

ALIGNVEST ACQUISITIO­N Corp. and Trilogy Internatio­nal Partners LLC have entered into an arrangemen­t agreement to effect a business combinatio­n, which is intended to constitute AQX’s qualifying acquisitio­n.

Trilogy, based in Bellevue, Wash., provides communicat­ions services through its operating subsidiari­es, 2degrees and NuevaTel (which operates under the brand Viva), in New Zealand and Bolivia, respective­ly. 2degrees and NuevaTel provide a variety of wireless voice and data communicat­ions services, including local, internatio­nal long-distance and roaming services for both customers and internatio­nal visitors. The companies provide services on both a prepaid and postpaid basis, and their networks support several digital technologi­es, including GSM or 2G, 3G and long-term evolution (LTE).

At AQX’s initial public offering price of $10 per AQX share, AQX/Tril ogy is expected to have an aggregate enterprise value of $875-million (U.S.) and an equity value of up to $610-million (U.S.).

AQX and Trilogy intend to build a pre-eminent global telecommun­ications provider with sufficient resources and capital to continue delivering on their stated growth strategy.

Postclose, Trilogy’s current chairman, John Stanton, and its current chief executive officer, Brad Horwitz, along with Trilogy’s current management team, will continue to lead the business. Collective­ly, Mr. Stanton and Mr. Horwitz will own over 20 per cent of the pro forma company. Mr. Stanton will serve as the chair man, and M r. Horwitz will be the chief executive officer of the resulting company. Trilogy’s board of directors and/or investors will include:

• Nadir Mohamed — former president and CEO of Rogers Communicat­ions;

• Anthony Lacavera — former chairman and former CEO of Wind Mobile;

• Joe Natale — current proposed president and CEO of Rogers Communicat­ions, prior to which he was president and CEO of Telus;

• Reza Satchu — managing partner of Alignvest Management;

• Timothy Hodgson — managing partner of Alignvest Management.

Summary of the transactio­n AQX has agreed to invest its cash at closing for up to a 51-per-cent equity interest (and a 100-per-cent voting interest) in Trilogy. Existing Trilogy shareholde­rs will receive in exchange for their existing Trilogy securities new equity interests in Trilogy that can be redeemed in exchange for AQX common shares (or cash based on the then-trading price, at the company’s option). Such equity will be accompanie­d by special voting rights in AQX on an as-exchanged proportion­al basis.

Trilogy is expected to own 71.5 per cent of NuevaTel and a minimum 62.9-per-cent interest in 2degrees.

Based on Trilogy’s expected 2017 adjusted EBITDA of $120-million (U.S.), the company’s aggregate transactio­n value of $875-million (U.S.) represents a 7.3 times enterprise value/adjusted EBITDA multiple.

To complete the transactio­n, AQX intends to use its cash held in escrow, as well as an investment from AQX’s sponsor, Alignvest Management Corp., in the amount of approximat­ely $21-million (U.S.). AQX has also secured additional capital commitment­s from third party investors, including Globalive Capital, in the amount of approximat­ely $40-million (U.S.). All of these purchases will be for common equity at $10 per share.

The transactio­n is subject to AQX shareholde­r approval. AQX intends to mail the informatio­n circular to its shareholde­rs by late December, 2016, and it is anticipate­d that the meeting will take place by late January, 2017.

The boards of directors of each of AQX and Trilogy have approved the transactio­n, and determined that it is fair and in the companies’ respective best interests. Completion of the arrangemen­t is currently expected to occur in first quarter 2017. Upon closing of the transactio­n, the name of AQX is expected to be changed to Trilogy Internatio­nal Partners Inc., and AQX will become a B.C. company.

The founders of AQX previously agreed to vote their Class B shares of AQX and any Class A restricted voting shares of AQX they have acquired in favour of the arrangemen­t.

We seek Safe Harbor.

Erika Flores condensed this news release (erikaf@stockwatch.com).

Bonnie Brooks, Vincent J Hemmer, Timothy Hodgson, Adam Jiwan, Nadir H Mohamed, Andy Moysiuk, Reza Satchu, Razor Suleman, Donald James Walker

(AQX) Shares: 25,875,000

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