EX-99.1 2 exh99-1.htm PRESS RELEASE Exhibit 99.1 Press Release
Exhibit 99.1
 
 
Attention Business Editors:
 
Rogers Communications Announces Agreement to Acquire Call-
Net Enterprises in all Stock Transaction
 

Acquisition Jumpstarts Rogers' Local Telephony Entry and Adds Scale to
Rogers Business Solutions;

Brings Significant Fibre Assets within Rogers Cable Territory and a
Pan-Canadian Long-Haul Fibre Network with U.S. Transit for Data and Voice
Traffic;

Call-Net Board Recommends Shareholders Accept Rogers' Offer of One RCI
Share for Each 4.25 Call-Net Shares
 
TORONTO, May 11 /CNW/ - Rogers Communications Inc. ("RCI" or "Rogers")
and Call-Net Enterprises Inc. ("Call-Net") today jointly announced that they
have entered into a definitive agreement under which RCI will acquire 100% of
Call-Net in a share for share transaction under a plan of arrangement.
Under the terms of the agreement, Call-Net Common and Class B
shareholders will receive a fixed exchange ratio of one RCI Class B Non-voting
share for each 4.25 outstanding shares of Call-Net, representing a fully
diluted equity value of approximately $330 million. In total, it is expected
that upon closing of the transaction approximately 9.0 million RCI Class B
Non-voting shares will be issued representing approximately 3.2% of the pro
forma shares outstanding. Based upon the May 10, 2005 closing price of the RCI
Class B Non-voting shares, the transaction values Call-Net at approximately
$8.71 per share. At March 31, 2005, Call-Net had senior secured notes due 2008
of $269.8 million outstanding and cash and short-term investments of
$79.6 million.
"This acquisition will significantly jumpstart and expand our ability to
provide customers with a full suite of service solutions that deliver the
simplicity, quality and value they want in one package, on one bill, from one
provider," said Ted Rogers, President and CEO of Rogers Communications Inc.
"This positions us immediately to offer primary line telephone service across
our residential and business bases of wireless and cable customers. It also
provides a substantial additional base of customers to cross-sell our
portfolio of communications and entertainment products and a skilled and
knowledgeable employee group with strengths in telephony sales and marketing.
As Rogers' cable telephony service is deployed on a market by market basis, we
will be able to migrate Call-Net customers in our Rogers Cable territory to
our advanced digital cable telephony platform when advantageous."
"This is a terrific day for Call-Net customers, shareholders, employees,
and for Canadian telecom in general," said Bill Linton, President and CEO of
Call-Net. "We share a common heritage with Rogers as a catalyst in bringing
competition to the Canadian communications markets. By joining our business
with one of the foremost Canadian names in communications, entertainment and
information services, Call-Net customers will have a greatly enhanced
selection of advanced services to choose from in their homes and businesses
and the ability to enjoy the convenience of complete multi-product bundles
from a single provider. The combination of Rogers' innovative offerings and
high quality wireless and cable networks will bring tremendous additional
choice and value to our customers."
  "This transaction offers an opportunity to acquire a significant customer
base and telecom assets that together provide network and operating cost
synergies and sales opportunities, which makes the transaction attractive
economically as well as strategically," added Ted Rogers. "This will
complement our deployment of an advanced broadband IP multimedia network to
support digital voice-over-cable telephony and other new voice and data
services across the Rogers Cable service areas and expand the base of



customers that will benefit from them."
Call-Net, through its Sprint Canada subsidiary and with approximately
1,800 employees, provides home phone and local business service, IP data, long
distance and wireless services to approximately 600,000 consumers and business
customers across Canada, the majority of which are concentrated in areas
served by Rogers Cable. Call-Net owns a 14,000 route kilometre North American
transcontinental fibre optic broadband network that spans across Canada and
connects all major cities and into main U.S. voice and data network access and
peering points. Call-Net also has more than 150 central office co-location
points in all of Canada's largest markets as well as options to acquire
significant CLEC assets, including extensive local fibre in eastern Canada,
most of which are within Rogers Cable's serving areas. Call-Net's wireless
services are offered to its customers, alone and in bundles with other voice
services, through a wholesale agreement with Rogers' Fido division.
Rogers anticipates that it will realize cost savings from the
transaction, including reduced payments to incumbent and other telecom
providers. The reduction in costs currently incurred by Sprint Canada, Rogers
Wireless and Rogers Cable include the areas of local and long haul
interconnection, the rental of local loops and transport, Internet and other
data transport costs, and the costs associated with the transport of local and
long haul wireless traffic.
The boards of directors of Rogers and Call-Net have approved the
transaction, with the members of the Call-Net Board having agreed that the
transaction is fair to their shareholders and that they will recommend that
the Call-Net shareholders approve the transaction at a Call-Net shareholder
meeting expected to be held before June 30, 2005.
BMO Nesbitt Burns is acting as financial advisor to Call-Net on this
transaction and has provided Call-Net's Board of Directors with a fairness
opinion that the consideration to be received under the Plan of Arrangement is
fair, from a financial point of view, to the shareholders of Call-Net. Scotia
Capital is acting as financial advisor to Rogers on this transaction.
Subject to certain customary conditions, including among others,
regulatory approvals and acceptance by Call-Net shareholders representing at
least two-thirds of the votes cast in respect of the Plan of Arrangement, this
transaction is expected to close during the third quarter of 2005. The
transaction is expected to be accounted for as a purchase and it is
anticipated that the share-for-share exchange will be structured as tax-free
to eligible Canadian shareholders. Call-Net has agreed not to solicit or take
certain other actions with respect to any competing proposal, and in addition
has agreed to pay Rogers a termination fee of $10 million under specified
conditions.
A proxy circular relating to the transaction is expected to be sent to
Call-Net's shareholders prior to the end of May 2005. Investors are urged to
read the proxy circular regarding the transaction when it becomes available,
as it will contain important information.
The proxy circular and the arrangement agreement will be filed in Canada
on SEDAR and in the U.S. with the U.S. Securities and Exchange Commission on
the Commission's website. Investors and security holders may obtain free
copies of the these documents (when they are available) on the SEDAR website
at www.sedar.com and on the SEC's website at www.sec.gov. The documents may
also be obtained directly from Rogers by directing a request to
investor.relations@rci.rogers.com or from Call-Net by directing a request
to investor.relations@sprint-canada.com, as applicable.
Holders of Call-Net Common shares and Class B Non-Voting shares are
reminded that (i) each Common share may, at the option of the holder, be
exchanged at any time for one Class B Non-Voting share and (ii) each Class B
Non-Voting share may, at the option of the holder by providing a declaration
of Canadian residency to Call-Net's transfer agent, be exchanged at any time
for one voting Common share.
 
 


Cautionary Statement Regarding Forward Looking Information:

This news release includes certain forward looking statements that
involve risks and uncertainties. We caution that actual future events will be
affected by a number of factors, many of which are beyond our control, and
therefore may vary substantially from what we currently foresee. These
forward-looking statements include, among others, statements with respect to
our objectives, and strategies to achieve those objectives, as well as
statements with respect to our beliefs, plans, expectations, anticipations,
estimates or intentions and are based on current expectations. We caution that
all forward-looking information is inherently uncertain and actual results may
differ materially from the assumptions, estimates or expectations reflected or
contained in the forward-looking information, and that actual future
performance will be affected by a number of factors, many of which are beyond
our control, including but not limited to the ability of the companies to
close the transaction and integrate the acquired operations, economic
conditions, technological change, regulatory change and competitive factors.
We are under no obligation to (and expressly disclaim any such obligation to)
update or alter any forward looking statements whether as a result of new
information, future events or otherwise. Important additional information
identifying risks and uncertainties is contained in our most recent annual and
interim reports and forms filed with the applicable Canadian securities
regulatory authorities and the U.S. Securities and Exchange Commission.

About the Companies:

Call-Net Enterprises Inc. (TSX: FON, FON.NV.B), primarily through its
wholly owned subsidiary Sprint Canada Inc., is a leading Canadian integrated
communications solutions provider of home phone, wireless, long distance and
IP services to households, and local, long distance, toll free, enhanced
voice, data and IP services to businesses across Canada. Call-Net,
headquartered in Toronto, owns and operates an extensive national fibre
network, has over 151 co-locations in five major urban areas including 33
municipalities and maintains network facilities in the U.S. and the U.K. For
more information, visit www.callnet.ca and www.sprint.ca.

Rogers Communications Inc. (TSX: RCI; NYSE: RG) is a diversified Canadian
communications and media company engaged in three primary lines of business.
Rogers Wireless Inc. is Canada's largest wireless voice and data
communications services provider and the country's only carrier operating on
the world standard GSM/GPRS technology platform; Rogers Cable Inc. is Canada's
largest cable television provider offering cable television, high-speed
Internet access and video retailing; and Rogers Media Inc. is Canada's premier
collection of category leading media assets with businesses in radio and
television broadcasting, televised shopping, publishing and sports
entertainment. For further information about the Rogers group of companies,
please visit www.rogers.com.

Conference Call for Investment Community and Media:

A live Webcast of a joint Rogers Communications and Call-Net conference
call with the investment community and media to discuss this announcement will
be broadcast via the Internet at www.rogers.com/webcast and/or www.callnet.ca
beginning at 10:15 a.m. ET on May 11, 2005. A re-broadcast of this call will
be available on the Webcast Archive page of the Investor Relations section of
www.rogers.com for a period of at least two weeks following the call.

%SEDAR: 00003765EF
 
 
For further information: (Investment Community): Rogers Communications:
Bruce M. Mann, (416) 935-3532, bruce.mann@rci.rogers.com; Eric A. Wright,



(416) 935-3550, eric.wright@rci.rogers.com; Call-Net Enterprises:
Roy Graydon, (416) 718-6160, roy.graydon@sprint-canada.com; (Media):
Rogers Communications: Jan L. Innes, (416) 935-3525, jinnes@rci.rogers.com;
Call-Net Enterprises: Karen O'Leary, (416) 718-6445,
karen.oleary@sprint-canada.com;
Archived images on this organization are searchable through CNW Photo Archive
website at http://photos.newswire.ca. Images are free to accredited members of
the media.