Manitoba Telecom Services Inc. Completes Bought Deal Financing of Approximately $249 million of Common Shares

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Stock symbol: MBT

WINNIPEG, Dec. 6, 2013 /CNW/ - Manitoba Telecom Services Inc. (TSX: MBT) ("MTS Allstream" or the "Company") today announced that it has closed its previously announced "bought deal" financing agreement of 8,855,000 common shares of the Company ("Common Shares") issued at a purchase price of $28.10 per Common Share, for gross proceeds of $248,825,500 (the "Offering"). There was no over-allotment option granted in connection with the Offering. The underwriting syndicate for the Offering was co-led by CIBC World Markets Inc. and Scotia Capital Inc., and also included BMO Nesbitt Burns Inc., RBC Dominion Securities Inc., National Bank Financial Inc., TD Securities Inc., Canaccord Genuity Corp. and GMP Securities L.P.

The net proceeds from the Offering were approximately $238 million, determined after deducting the underwriters' commission and expenses of the Offering. As previously announced, the Company intends to use the net proceeds from the Offering to fulfill future pension funding obligations (including prefunding its solvency deficit and other potential future pension liabilities) and 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. The Company believes that its planned prefunding will eliminate solvency payments until at least 2016, and longer if interest rates rise.

The Company has said it expects to deliver significant increases in free cash flow and growth across its strategic product lines in 2014, and expects that it will not be taxable before 2020 at the earliest. MTS Allstream maintains an attractive dividend fully supported by strong and growing free cash flow from its incumbent position in Manitoba, combined with interesting growth opportunities at Allstream, and remains committed to maintaining an investment grade credit rating.

This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "1933 Act"), or any state securities laws and may not be offered or sold within the United States or to, or for the account or benefit of U.S. persons (as defined in Regulation S under the 1933 Act) absent such registration or an applicable exemption from such registration requirements.

Forward-looking statements disclaimer
This news release includes forward-looking statements, including, but not limited to, statements pertaining to the Company's proposed use of the net proceeds of the Offering, the Company's expectation that the prefunding of pension solvency obligations will eliminate solvency payments until at least 2016, and longer if interest rates rise, expected significant increases in free cash flow and growth across strategic product lines in 2014 and the expectation that the Company will not be taxable before 2020 at the earliest. Examples of statements that constitute forward-looking information may be identified by words such as "believe", "expect", "project", "should", "anticipate", "could", "target", "forecast", "intend", "plan", "outlook", "see", "set", "pending", and other similar terms. All forward-looking statements are made pursuant to the safe harbour provisions of applicable Canadian securities legislation.

Forward-looking statements are subject to risks, uncertainties and assumptions. As a consequence, actual results in the future may differ materially from any forward-looking conclusion, forecast or projection, whether expressed or implied. Therefore, forward-looking statements should be considered carefully and undue reliance should not be placed on them.

Please note that forward-looking statements in this news release reflect Management's expectations as at December 6, 2013, and thus, are subject to change thereafter. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Factors that could cause actual results to differ materially include, but are not limited to, matters identified in the "Risks and uncertainties" section and elsewhere in the Company's third-quarter 2013 interim MD&A and the Company's 2012 annual MD&A, which are available on the Company's website at www.mtsallstream.com/investors and on the SEDAR website.

Manitoba Telecom Services Inc. (MTS Allstream)
MTS Allstream is one of Canada's leading national communication solutions companies, providing innovative communications for the way Canadians live and work today. The company has more than 100 years of experience, with approximately 5,000 employees across Canada. MTS Allstream's business is dynamic and consists of two operating divisions. In Manitoba, MTS is the leading full-service telecommunications provider for residential and business customers.

MTS's suite of services includes the latest in wireless technology, broadband services, IPTV, voice services, home security, and an extensive range of business solutions. Across Canada, Allstream is a leader in IP communications and is the only national provider that focuses exclusively on the business telecommunications market. MTS Allstream has nearly two million customer connections spanning business customers across Canada and residential consumers throughout the province of Manitoba. The Company's extensive national fibre optic network spans more than 30,000 kilometres. MTS Allstream has spent 12 consecutive years on the Jantzi Social Index for leadership in social responsibility and is the recipient of the 2011 Governance Gavel Award from the Canadian Coalition for Good Governance, recognizing clear and effective public disclosure and leading governance practices.

MTS Allstream's common shares are listed on the TSX (trading symbol: MBT). Customers, stakeholders and investors who want to learn more about MTS Allstream are encouraged to visit: www.mtsallstream.com.

For more information about MTS's products and services, please visit www.mts.ca. For more information about Allstream's products and services, please visit www.allstream.com.

SOURCE: MTS Allstream

Investors:   
Paul Peters, Investor Relations
204-941-6178
[email protected]

Media:
Selena Hinds, Corporate Communications
204-941-8576
[email protected]