Manitoba Telecom Services Inc. has announced it will issue new equity and raise as much as $222 million to cover future pension funding obligations.
It has entered into a "bought deal" agreement with a syndicate of underwriters led by CIBC and ScotiaBank who have agree to purchase 7,150,000 shares and sell them to the public.
The underwriters could exercise an over-allotment option taking total proceeds up to $222 million.
The company has previously hoped to use $170 million of the proceeds of the negotiated sale of its Allstream division, but that transaction was not approved by the federal government.
Earlier this month the company stated that strong asset returns and a 70 basis point interest rate increase have helped reduce its pension solvency deficit by one-half.
The company believes that its planned prefunding will eliminate solvency payments until at least 2016 and any need to incur additional indebtedness to fund such obligations prior to such time.
The equity offering will be made at a share price of $28.01.
Trading was halted on MTS shares after the announcement this afternoon when MTS shares were trading at $28.94.