Hydro Ottawa Holding Inc.

Hydro Ottawa Holding Inc.

February 25, 2008 14:01 ET

Hydro Ottawa to Sell Telecom Ottawa to Atria Networks for $63 Million

OTTAWA, ONTARIO--(Marketwire - Feb. 25, 2008) - Hydro Ottawa Holding Inc. ("Hydro Ottawa") has reached a definitive agreement to sell Telecom Ottawa Holding Inc.'s subsidiaries ("Telecom Ottawa") to Atria Networks LP ("Atria") for $63 million. When liabilities and closing costs are considered, Hydro Ottawa expects to realize a gain of over $20 million, should the transaction close in early 2008 as currently expected.

In November of 2007, the Board of Hydro Ottawa directed the company's management and its financial advisor, Genuity Capital Markets, to explore a sale or partial sale of Telecom Ottawa, in order to focus on Hydro Ottawa's core energy businesses. A large number of parties were canvassed for their interest, and several proposals were received. The Atria proposal was selected due to the compelling combination of the following benefits:

- Attractive Valuation - The $63 million price represents a multiple of approximately 3.9 times 2007 revenues and 8.0 times 2007 earnings before interest, taxes, and depreciation ("EBITDA"), in line with multiples paid in other recent transactions in the Canadian telecommunications industry.

- Mitigates Risk to the Telecom Ottawa Business - The reduced risk exposure to the business through an expedited and limited due diligence period best protects the Telecom Ottawa business from harm through the sale process.

- Transaction Certainty - The agreement has limited conditionality and no financing or due diligence conditions and so provides a high level of transaction certainty to Hydro Ottawa.

- Ability to Consider Superior Proposals - The agreement with Atria preserves the ability of Hydro Ottawa to accept superior binding offers for the business subject to certain conditions if they are made on or before March 8, 2008.

"Our strategic focus moving forward is on building our core businesses of electricity distribution and renewable energy generation," said Hydro Ottawa CEO Rosemarie T. Leclair. "The sale of Telecom Ottawa at a significant profit validates the investments we have made in Ottawa's broadband infrastructure, and it's also a win for customers, who will continue to get the high quality telecommunications services they have come to expect from Telecom Ottawa. Atria is an experienced and respected investor in the telecom sector, and is committed to operating and growing the business."

"Telecom Ottawa has built an impressive network in the National Capital Region and has provided a superior level of service to its business and public sector customers," said Steve McCartney, CEO of Atria. "We are excited by the prospect of providing Ottawa customers with new services and access to a 4,250 km fibre optic network. We plan to continue Telecom Ottawa's success and build on its track record of providing exceptional telecommunications services to customers in the area."

Ottawa Mayor Larry O'Brien, who sits on the Board of Hydro Ottawa, said the deal is a positive outcome for both Hydro Ottawa and the City. "I'm very pleased with the results of the process. The strong selling price shows the value that has been added to the company through good strategic decision-making, and I congratulate Hydro Ottawa and Telecom Ottawa on that. Some of that value will now be returned to the City of Ottawa and its residents through dividends."

Telecom Ottawa is a specialized telecommunications carrier that provides broadband facilities and Internet access to the metro Ottawa region and Cornwall. It owns and operates an all-optical 10-Gigabit ethernet Internet Protocol (IP) network with more than 1,250 km of fibre optic cable. This broadband infrastructure provides high-speed connectivity to governments and institutions, major telecommunications carriers, and nearly 200 businesses. The company serves more than 95% of Ottawa's MUSH sector (municipalities, universities, schools and hospitals).

The sale agreement positions Telecom Ottawa as part of a larger dynamic organization with the capacity to grow the business to realize its maximum potential.

The agreement includes customary provisions prohibiting Hydro Ottawa or its representatives from soliciting any other acquisition proposals. However, it does allow Hydro Ottawa to permit any party making bona fide proposals at a superior valuation to conduct due diligence, and further allows Hydro Ottawa to accept such a superior proposal if it is received prior to March 8, 2008, and upon payment of a termination fee of $1.25 million. Atria has the option of matching any competing bid.

About Hydro Ottawa Holding Inc.

Hydro Ottawa Holding Inc., through its subsidiaries, maintains one of the safest, most reliable and cost-effective electricity distribution systems in Ontario; operates some of Canada's greenest and most environmentally friendly power generating stations; and brings high-speed connectivity to all levels of government, the city's major public institutions, and a growing number of businesses and service providers. It owns and operates three subsidiaries: Hydro Ottawa Limited, Energy Ottawa Inc., and Telecom Ottawa Holding Inc. It is wholly owned by the City of Ottawa.

About Atria Networks LP

Atria Networks LP specializes in business data services, offering the fastest high-dependability solutions for Internet access, point-to-point connectivity and IT continuity.

With one of the most extensive fibre-optic networks in Ontario, Atria can scale immediately to meet any bandwidth requirement. Continuity services include offsite data storage, email and web security, and Internet redundancy for protection against downtime losses in revenue and productivity. Active in the communities served, Atria Networks invests locally in education and literacy.

Contact Information