Telus must help Mobilicity with $10m if deal fails after June 10

Telus Corp. would be on the hook for at least a $10 million non-refundable deposit to Mobilicity if its deal to acquire the new entrant carrier does not proceed after a June 10 deadline, the companies’ acquisition plan says. The deposit, the acquisition plan says, would be considered an “interest free loan” to Dave Wireless Inc., which operates Mobilicity’s, and would not be required to be repaid if the deal falls through after that date. Telus could avoid the non-refundable loan by backing out of the deal before June 10. Telus said last week that it had reached a $380 million deal to acquire Mobilicity, and its roughly 250,000 subscribers. The deal must still be approved by Industry Canada and the federal Competition Bureau before it can be completed. David Fuller, Telus' chief marketing officer, told The Wire Report last week that there is no break fee for the deal. According to the companies’ official acquisition plan, the deal has an outside closing date of Aug. 2. Telus can extend that date to Aug. 30, and to do so would be required to fund Mobilicity’s ongoing operations for most of the month of August if the acquisition is not completed by Aug. 2. Under those circumstances, the plan says, Telus would be required to put an undetermined amount of money in a trust company “to fund the ongoing cash requirements of the Mobilicity Group” from Aug. 3 to Aug. 30. Industry Minister Christian Paradis must approve the deal and the transfer of Mobilicity's spectrum assets to Telus. This spring, the minister held a consultation on new rules to govern the transfer of spectrum licences, and a decision on the new policy is expected in advance of a June 11 deadline to submit applications to participate in Industry Canada's 700 MHz wireless auction in November. Observers and analysts said last week that Paradis may block Telus' deal to purchase Mobilicity to support his policy aim of ensuring four competing wireless carriers in each region of the country. —With reporting by Nicholas Kyonka at nkyonka@thewirereport.ca and reporting and editing by Simon Doyle at sdoyle@thewirereport.ca. --- CORRECTION: An earlier version of this story said Telus would have to pay the $10-million loan if the deal failed. Telus could avoid the loan by backing out of the deal before the June 10 deadline.

Telus must help Mobilicity with $10m if deal fails after June 10

News | May 24, 2013

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Telus must help Mobilicity with $10m if deal fails after June 10

News | May 24, 2013

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