AT&T Canada announced it has successfully established new commercial agreements with AT&T Corp., defining how the companies will serve customers as AT&T Canada transitions to a fully independent and re-branded company. These agreements, along with its proposed restructuring plan, position AT&T Canada to achieve its goal of emerging as a strong long-term competitor in the Canadian telecom marketplace.
In addition, AT&T Canada reported that the Ontario Superior Court of Justice has granted an Order for the company to disseminate the company's capital restructuring plan to its bondholders and affected creditors, and the company expects to hold a meeting of these creditors to vote for approval of the plan on February 20, 2003. As previously announced, the plan includes the exchange of the company's outstanding public debt for 100% of the new equity of AT&T Canada and a minimum of $200 million in cash. AT&T Canada remains on track to complete its capital restructuring at the end of the first quarter 2003.
In today's hearing, the Court also ratified the company's execution of the new commercial agreements with AT&T Corp. which will be effective upon similar approval of the U.S. Bankruptcy Court.
The new commercial agreements, among other things:
- Establish a clear path for AT&T Canada to launch a new brand name by September 9, 2003 and cease use of the AT&T brand by no later than December 31, 2003, with the exception of the use of the AT&T brand for its calling card and Internet addresses until no later than June 30, 2004;
- Enable AT&T Canada and AT&T Corp. to continue working together on a non-exclusive basis, and maintain network ties between the two companies for the benefit of customers;
- Provide continuity for AT&T Canada's global connectivity, technology platform and product suite, including North American voice services, end-to-end frame services and bilateral traffic exchange;
- Provide a framework to deal with ongoing cooperation and a process to transition network support provided by AT&T Corp. for the company's toll-free platforms by December 31, 2005 with details of the transition plan to be completed by no later than December 31, 2003. The transitional network support arrangements may be extended by mutual agreement; may be accelerated under certain conditions to June 30, 2004; or accelerated in the event of an acquisition of 20% or more of AT&T Canada's equity by a Strategic Competitor or in other circumstances;
- Recognize AT&T Corp.'s ability to serve Canadian customers directly, including by competing with AT&T Canada; and
- Provide AT&T Canada the ability to forge additional supplier relationships that will enhance its connectivity and product offerings.
These transitional arrangements will enable AT&T Canada to continue to provide the high level of service that its customers have come to expect. Details of these arrangements will be contained in AT&T Canada's Information Circular to be distributed to its bondholders and other affected creditors on or about January 22, 2003.
John McLennan, AT&T Canada's Vice Chairman and Chief Executive Officer stated, "We are very pleased with these transitional commercial agreements, which will give us the flexibility to develop additional supplier relationships that will enhance our connectivity and product offerings. The agreements put in place provide the foundation we need to effectively transition to our new brand, which we already are moving aggressively to develop. From our customers' perspective, it will be business as usual in terms of the products and services they currently receive from us."
John A. MacDonald, AT&T Canada's President and Chief Operating Officer, added, "We are very comfortable with the continuity we have achieved through these agreements in terms of our technology platform, global connectivity and network support. We have put in place the necessary support to enable us to meet the needs of our customer
