For your information
CGI Completes Definitive Agreement With BCE And Bell Canada
MONTREAL, QUEBEC--
/T/
- Bell Canada outsourcing contract estimated at $4.5 billion over
10 years
- Acquisition of Bell Sygma Telecom Solutions and Bell Sygma
International
- Special shareholders' meeting set for June 29, 1998
/T/
The CGI Group today announced the signing of definitive agreements
regarding its previous announcement to further strengthen its
existing business relationship with BCE Inc. and Bell Canada. The
agreements are conditional only on the approval of CGI's
shareholders at a special shareholders' meeting to be held in
Montreal on June 29, 1998. The Information Circular for the
meeting will be mailed to shareholders this week.
"The due diligence went very well, and pending shareholder
approval we will meet our June 30, 1998 target date for finalizing
the agreement," said Serge Godin, Chairman and Chief Executive
Officer. "This multi-faceted transaction guarantees significant
growth for CGI. It provides CGI with the expertise, critical mass
and resources to be a world-class IT services player
internationally in the telecommunications sector - one of CGI's
selected economic sectors."
As part of the agreement, CGI will manage Bell Canada's IT systems
development and maintenance previously managed by Bell Sygma
Telecom Solutions, and acquire both Bell Sygma Telecom Solutions
and Bell Sygma International. This agreement is consistent with
CGI's objective of establishing a strong presence in the
telecommunications industry.
CGI estimates the outsourcing contract with Bell Canada at $4.5
billion. This represents the largest outsourcing contract ever in
Canada, and among the five largest in North America. In addition,
Bell Sygma International operations which will be acquired by CGI
represent $80 million in incremental annual revenue.
CGI will acquire these operations in exchange for 17.2 million of
its First Preferred Shares, Series 6, at $11.49 per share
reflecting the two-for-one share split effective May 21, 1998,
convertible one for one into Class A subordinate voting shares for
an aggregate amount of $197.6 million. Conversion will take place
immediately after completion of the transaction.
As part of the transaction, Bell Canada and CGI have also agreed
to extend their strategic alliance to June 30, 2008. This alliance
provides CGI with significant competitive benefits and allows the
company to bid jointly with Bell Canada on a greater number of
large scale outsourcing and systems integration contracts.
Following the transaction, Bell Canada's equity interest in CGI
will be 42 percent and its voting interest will be at 17.8
percent, compared with a combined voting interest of 64 percent
for all holders of Class B shares. Bell Canada will hold three
seats on the Board of CGI, up from two currently. Bell Canada
board representatives will be: Jean Monty, President and CEO of
BCE; John MacDonald, President and Chief Operating Officer, Bell
Canada and Louis Tanguay, President and Chief Operating Officer of
Bell Canada International.
Under the terms of the agreement, the majority shareholders of CGI
have the option of exchanging (through a "put option") 20 percent
of their holdings in Class B multiple voting shares of CGI for
shares of BCE over a four-year period, an additional 30 percent in
the fifth year, and the remainder during the sixth year. After the
sixth anniversary, and for a period of two years after that, BCE
has the option to cause the exchange ("call option") of all Class
B multiple voting shares held by the majority shareholders into
shares of BCE. On the sixth anniversary, the multiple voting
shares will become single voting shares.
Shareholders will be asked to vote on resolutions primarily
related to the share structure, and notably providing for
redesignation of Class A subordinate voting shares as Common
Shares six years hence when the Class B shares are to
automatically convert into Class A shares on a one for one basis.
CGI is the largest Canadian-owned independent information
technology consulting firm and the 6th largest in North America.
With this transaction, CGI will have more than 7,500 professionals
compared with 4,000 currently, and a revenue-run rate of
approximately $1.1 billion. The company's backlog is worth $6
billion. CGI provides end-to-end IT services and business
solutions to some 2,000 clients throughout North America and
internationally. CGI's shares are listed on the Toronto and
Montreal stock exchanges under the GIB.A symbol. Website address:
www.cgi.ca. |
