Manitoba Telecom Services Inc.
TSX : MBT

Manitoba Telecom Services Inc.

November 19, 2013 15:15 ET

Manitoba Telecom Services Inc. Announces a Bought Deal Offering of Approximately $200 million of Common Shares

WINNIPEG, MANITOBA--(Marketwired - Nov. 19, 2013) -

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Manitoba Telecom Services Inc. (TSX:MBT) ("MTS Allstream" or the "Company") today announced that it has entered into a "bought deal" financing agreement with a syndicate of underwriters, led by CIBC and Scotiabank, under which the underwriters have agreed to purchase from the Company and sell to the public 7,150,000 common shares of the Company ("Common Shares") at a purchase price of $28.10 per Common Share (the "Offering Price"), for gross proceeds of $200,915,000 (the "Offering"). The Company has also granted the underwriters an over-allotment option (the "Over-Allotment Option") to purchase up to a further 1,072,500 Common Shares at the Offering Price, solely to cover their over-allocation position, if any. The Over-Allotment Option will be exercisable in whole or in part, at the sole discretion of the underwriters, at any time until and including 30 days following the closing of the Offering.

The net proceeds from the Offering will be approximately $193 million, determined after deducting the underwriters' commission but prior to expenses of the Offering. In the event that the Over-Allotment Option is exercised in full, the net proceeds to be received by MTS Allstream will be approximately $222 million, determined after deduction of the underwriters' commission but prior to expenses of the Offering. 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 any need to incur additional indebtedness to fund such obligations prior to such time.

The Offering is scheduled to close on or about December 6, 2013 and is subject to normal regulatory approvals, including approval of the Toronto Stock Exchange. Pursuant to the Offering, the Common Shares will be offered in each of the provinces of Canada by way of a short form prospectus, and by way of private placement in the United States to Qualified Institutional Buyers pursuant to Rule 144A under the United States Securities Act of 1933, as amended, and internationally as permitted by the Company.

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 and information (collectively, "statements") including, but not limited to, statements pertaining to the Company's proposed public offering of Common Shares and the prefunding of its pension solvency obligations. 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 November 19, 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. This news release and the financial information contained herein have been approved by the Company's Board of Directors.

Factors that could cause anticipated opportunities and actual results to differ materially include, but are not limited to, matters identified in the "Corporate update" section in this news release, as well as 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.

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