The Successful Investor Hotline – Friday, May 24, 2013

Article Excerpt

MANITOBA TELECOM SERVICES INC., $33.93, Toronto symbol MBT, rose 6% today after it agreed to sell its Allstream subsidiary to Accelero Capital Holdings, a private firm controlled by Egyptian billionaire Naguib Sawiris. In 2004, the company paid $1.6 billion for Allstream, which provides integrated telephone, Internet and other communication services to over 50,000 businesses across Canada. The sale price is $520 million, which is equal to 23% of Manitoba Telecom’s $2.3-billion market cap. If you disregard various closing costs, Manitoba Telecom will receive $405 million. Assuming regulators approve, the company expects to complete the sale in the second half of 2013. Manitoba Telecom will use the cash to contribute $130 million to its underfunded employees’ pension fund. It will also pay back $70 million of short-term loans it took out to fund recent pension contributions. As well, the company will continue to fund the Allstream pension plans and will contribute $40 million to them when the deal closes. Selling Allstream will let Manitoba…