LEXPERT MAGAZINE
|
JUNE 2017 11
LEXPERT: Would you consider this transac-
tion a model for other Canadian SPACs?
Simon Romano (Stikeman Elliott LLP, for
Alignvest): I do think this transaction rep-
resents a very good way to proceed with a
SPAC qualifying acquisition. e key was
lining up additional committed funds via
an institutional private placement before
announcing the transaction. at was a
solid show of support from sophisticated
investors, with sponsor participation, that
was instrumental in managing the redemp-
tion risk. Post-Alignvest, this was the mod-
el most other SPACs used to get their trans-
actions through. Alignvest has evolved the
model a little further in its recently filed
proposed second SPAC, getting committed
funds even before doing its IPO.
LEXPERT: Why was Trilogy ultimately se-
lected as the target for Alignvest? When
did the companies first meet?
Scott Morris (Senior Vice President and
General Counsel, Trilogy International Part-
ners): Trilogy management became ac-
quainted with Alignvest a couple of years
ago through a minority shareholder in
Trilogy's New Zealand mobile business,
2degrees Mobile. As a result of this intro-
duction, Alignvest was familiar with Tril-
ogy's New Zealand business and strategic
approach on capturing the growth in usage
and data services in international mobile
telecom markets. Trilogy was looking for
a strategic partner who could provide the
additional equity required to capitalize on
this growth, including freeing up cash pre-
viously required for debt repayments.
Romano: Trilogy is very much a growth-
oriented company that had debt con-
straints. It is primarily a cellphone supplier
in New Zealand and Bolivia, both of which
are countries with a small number of sup-
pliers, and which are in the process of mov-
ing from 3G to 4G services and providing
greater data-oriented services. Alignvest
thought it was a very attractive company,
with which it had prior relationships. Also,
Nadir Mohamed, formerly of Rogers, Joe
Natale of Rogers, and formerly of TELUS,
and Anthony Lacavera of WIND Mobile,
were highly experienced Canadian tele-
communications ex-CEOs who assisted.
LEXPERT: What was the experience of
working on this deal? How would you
characterize the negotiations?
Cheryl Slusarchuk (Blake, Cassels & Gray-
don LLP, for Trilogy International Partners): It
was a textbook example of how high-func-
Making the Mold
tioning teams — business, financial and
legal — working together can solve compli-
cated problems with moving pieces in real
time. e LOI [letter of intent] provided a
strong framework for the business deal and
valuation, which even during the inevitable
difficult conversations, both sides respect-
ed and didn't attempt to renegotiate items
that at a high level had been agreed to by
the key business people. is approach al-
lowed the teams to focus on 'operationaliz-
ing' the deal structure, including managing
the cross-border aspects of the transaction,
including the "up-C" structure [a reverse
exchangeable share structure], SPAC re-
quirements and those associated with New
Zealand overseas foreign-ownership rules.
Romano: e teams worked very well to-
gether. e Stikemans Toronto-based
team included the folks who had originally
done the Alignvest IPO, while the Blakes
Vancouver-based team was new to SPACs
but able to call on the experience of their
Toronto colleagues, who had SPAC IPO
experience. e negotiations were long
and complex, in part because a novel US
"up-C" structure, via a Canadian plan of
arrangement, was used for tax efficiency,
and also because neither the New Zealand
or Bolivian operations were wholly owned
so minority shareholders had to be taken
into account at various levels in both coun-
tries. However, they were very efficiently
conducted. Both legal teams, as well as
Trilogy's US counsel, were very focused on
attempting to achieve a successful deal.
LEXPERT: One of the pitfalls of the SPAC
structure is that shareholders can redeem
their shares leaving the buyer with insuffi-
cient cash balances to carry out the acquisi-
tion. How did you manage that risk?
Romano: e redemption right is the
unique and defining feature of a SPAC of-
fering. Investors effectively get both a put
With the Alignvest acquisition of Trilogy as a guide, the SPAC structure is likely here to stay
INTERVIEW BY GENA SMITH
Simon
Romano
Stikeman
Elliott LLP
(for Alignvest
Acquisition)
Scott Morris
SVP, General
Counsel,
Trilogy
International
Partners
ON THE DEAL
Alignvest Acquisition Corp. pulled off a relatively smooth qualifying acquisition when
it picked up US-based telecom Trilogy International Partners for US$875 million. But
after news that Dundee Acquisition Corp. and INFOR Acquisition Corp. had redeemed
their shares and delisted, some observers heard death knells ringing for Canadian
SPACs. It turns out those reports were greatly exaggerated. In late May, Alignvest's pro-
posed second SPAC increased the size of its IPO; it has now raised over $500 million.
Cheryl
Slusarchuk
Blake,
Cassels &
Graydon LLP
(for Trilogy
in Canada)
