Trilogy International Partners Inc. Announces Sale of New Zealand Subsidiary to Voyage Digital (NZ) Limited

01 Jan 2022 10:55 AM | Mike Hearn (Administrator)

BELLEVUE, WA / ACCESSWIRE / December 31, 2021 / Trilogy International Partners Inc. ("Trilogy" or "TIP Inc.") (TSX:TRL), an international wireless and fixed broadband telecommunications operator, and its minority partner Tesbrit BV, today announced that they have entered into a definitive agreement to sell 100% of their equity in Two Degrees Group Limited ("2degrees") to Voyage Digital (NZ) Limited ("Voyage"), a joint venture between Macquarie Asset Management and Aware Super as owners of Vocus Group Limited. Trilogy owns 73.17% of the equity in 2degrees. It first announced discussions with Macquarie Asset Management and Aware Super and a potential merger of 2degrees with Orcon Group in October 2021.

The implied enterprise value of 2degrees equates to NZ$1.70 Bn (including lease liabilities). This represents an EV/EBITDA multiple of 8.9x based on last twelve months of New Zealand Segment Adjusted EBITDA at September 30, 2021 on a US-GAAP basis and using an implied enterprise value of NZ$1.58 Bn excluding lease liabilities. On a cash free debt free basis, the purchase price for 100% of 2degrees shares (including employee options that will convert into shares in connection with the sale) represents an equity value of NZ$1.315 Bn, subject to potential adjustments at closing for specific costs or payments by 2degrees between signing and closing.

"Over the past several months we have been focused on strategic initiatives to maximize value for our stakeholders. This transaction crystalizes value for Trilogy shareholders at a valuation which reflects the remarkable accomplishments of our team in New Zealand and runway for future growth," said Brad Horwitz, President and CEO of Trilogy.

The transaction is subject to required regulatory approvals and the approval of Trilogy's shareholders.

Trilogy anticipates that closing will take place in the first half of 2022.

Trilogy and 2degrees are being advised by Montarne, and Macquarie Asset Management, Aware Super and Vocus Group Limited are being advised by UBS.

Shareholder Approval and Recommendation of the Board

Under the provisions of the Business Corporations Act (British Columbia), Trilogy's governing corporate law statute, the sale of all or substantially all of its undertaking requires approval by way of a special resolution, which is a resolution approved by at least two-thirds of the votes cast on the matter at a meeting of shareholders. The special meeting of common shareholders is currently expected to be held in Q1 2022. SG Enterprises, II LLC ("SG"), Brad Horwitz and Alignvest Management Corporation ("Alignvest") and certain of its affiliates, have entered into support agreements agreeing to vote their Trilogy common shares in favor of the transaction.

Trilogy's board of directors, after consultation with management, its financial adviser and its legal advisors and reliance upon a fairness opinion from Grant Samuel and Associates Limited, and as to be more fully described in the management information circular to be filed and mailed to common shareholders in connection with the transaction, has unanimously approved the transaction and determined that it is in the best interests of Trilogy and recommends that common shareholders vote in favor of the transaction.

The Purchase Agreement

Under the terms of the purchase agreement, Voyage will acquire all of the equity interest of 2degrees. In addition to shareholder and regulatory approvals, the closing of the transaction is subject to the receipt of certain third-party consents, as well as a number of other customary conditions, including with respect to the accuracy of the parties' representations and warranties and material compliance with their respective covenants.

The purchase agreement includes customary non-solicitation provisions subject to certain fiduciary exceptions.

Copies of the purchase agreement and the management information circular to be mailed to common shareholders in connection with the transaction will be filed with Canadian securities regulators and will be available on the SEDAR profile of Trilogy at Shareholders are urged to read the management information circular and the other relevant materials when they become available, as such materials will contain important information regarding the transaction.

The Bridge Loan

SG, Brad Horwitz and Alignvest have also committed to provide up to a $10M loan (the "Bridge Loan") to fund Trilogy's corporate costs and certain transaction related costs between signing and the expected closing date of the transaction, subject to the approval of the Toronto Stock Exchange.

The entrance into the Bridge Loan constitutes a related-party transaction under Multilateral Instrument 61-101-Protection of Minority Security Holders in Special Transactions ("MI 61-101") due to the participation by certain Trilogy insiders as lenders. The Bridge Loan is exempt from the formal valuation and minority shareholder approval requirements of MI 61-101 pursuant to sections 5.5(a) and 5.7(1)(a) of MI 61-101 as the fair market value of the Bridge Loan does not exceed 25.0% of Trilogy's market capitalization. The material change report in relation to the Bridge Loan will be filed fewer than 21 days before the closing date of the Bridge Loan as Trilogy wishes to complete the Bridge Loan as soon as commercially practical after all required approvals are obtained.

About Trilogy International Partners Inc.

TIP Inc. is the parent company of Trilogy International Partners LLC, a wireless and fixed broadband telecommunications operator formed by wireless industry veterans John Stanton, Theresa Gillespie and Brad Horwitz.

Trilogy currently provides wireless and fixed broadband communications services through its operating subsidiaries in New Zealand and Bolivia. Its head office is located at 155 108th Avenue NE, Suite 400, Bellevue, Washington, 98004 USA.

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