Telecom company Trilogy International Partners LLC, which runs wireless networks in New Zealand and Bolivia, plans to go public in Canada by agreeing to a takeover offer from Toronto-based Alignvest Acquisition Corp.
Trilogy, a private company founded in 2005 by U.S. wireless entrepreneur John Stanton, announced a transaction late Tuesday that will pay down debt and create a Toronto Stock Exchange-listed wireless company with a $1-billion enterprise value.
The transaction will see Alignvest, a special purpose acquisition company, or SPAC, and its backers invest a total of $269-million (U.S.) in Trilogy for a 50.1-per-cent stake in the company. That includes cash raised when the SPAC went public last year and an additional $61-million of new capital from Alignvest management and backers. Alignvest shareholders must approve the acquisition and a vote is expected early in the new year.
Alignvest chairman Nadir Mohamed, former CEO of Rogers Communications Inc., and Anthony Lacavera, founder and former CEO of Wind Mobile Canada, are expected to join the Trilogy board of directors. Incoming Rogers CEO Joe Natale is also an Alignvest investor. In a conference call Wednesday, Mr. Mohamed said the opportunity to invest in Trilogy is "truly compelling," because of the strength of the management team and the growth potential that exists in New Zealand and Bolivia, where Trilogy owns the spectrum it needs to increase revenue as clients switch to smartphones and increase their consumption of data.
Mr. Stanton and his team previously held senior roles at McCaw Cellular Inc. and several other wireless companies; in total, these companies were sold for more than $70-billion. Mr. Stanton now plans to roll his $295-million equity stake in Trilogy into shares in the new company and invest an additional $5-million. Mr. Stanton lives in Bellevue, Wash., and recently led a group that acquired the Seattle Mariners baseball team. In a conference call Wednesday, Mr. Stanton said he decided to work with Alignvest because of the team's deep experience in wireless.
Alignvest's investment will be used in part to pay down Trilogy debt, some of which is high-yield bonds at 13-per-cent interest rates, along with funding growth initiatives, including potential acquisitions.
Trilogy owns the third-largest telecom company in New Zealand and Bolivia, and both are markets that resemble Canada 10 years ago, with double-digit wireless growth and just three incumbent wireless providers. The New Zealand company, called 2degrees, has 23-per-cent market share and estimated 2016 revenue of $321-million. In Bolivia, Trilogy controls Nuevatel, which has 24 per cent of wireless users and $217-million of projected revenue this year.
Six Canadian SPACs went public over the past 18 months and raised a total of $1-billion (Canadian). Under the regulations that govern SPACs, the companies need to complete a transaction with a preset time frame, typically two years, or return their capital to investors. Alignvest is the third SPAC to announce a transaction. Alignvest went public at $10 a share in June, 2015, and shares rose 16 cents to $10.06 early Wednesday on news of the Trilogy transaction.
The first proposed SPAC deal, which would have seen Infor Acquisition Corp. acquire a stake in lease finance company ECN Capital Corp., was cancelled last month by the two companies after it became clear that Infor shareholders would vote against the transaction.