Manitoba Telecom Services (MTS) is planning a stock offering of nearly nine million shares to help pay for future pension funding obligations.
The company intends to use the net proceeds of about $238 million from the sale to prefund its solvency deficit and other potential future pension liabilities as well as for general corporate purposes.
“Strong investment returns, combined with an approximate 70 basis point increase in interest rates since the beginning of 2013 have helped reduce the company’s pension solvency deficit,” says a statement from MTS. “The company believes that its planned prefunding will eliminate solvency payments until at least 2016 and any need to incur additional indebtedness to fund such obligations prior to such time.”
The telecom firm originally planned to make a contribution to the plan using the proceeds from the sale of its Allstream unit to Egypt’s Accelero Capital Holdings. However, Industry Canada blocked the sale in October due to unspecified concerns over national security.
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