Atlantic Canada firm leads $3B international merger

The largest deal that telecommunications firm Columbus International Inc. has ever announced involves no Canadian operations but only Canadian management and an Atlantic Canada law firm that saw through to Columbus's trek from incorporation to its sale. 

The massive US$3.025-billion international deal, announced Nov. 7, is the price London, England-based Cable & Wireless Communications PLC (CWC) is willing to pay for Barbados-based Columbus. When all is said and closed – expected closing is Q1 2015 after regulatory approvals – the merged entity will have a foothold in 42 different countries across the Caribbean, Central America and Andean region, with expansion underway to Ecuador and Peru. 

The deal, from an operational perspective, is purely international and non-Canadian. But Columbus's lead legal counsel on the deal is Atlantic Canadian firm Cox & Palmer LLP, which has been lead counsel for the firm since its inception in 2005. 

According to Wayne Myles, counsel at Cox & Palmer and lead lawyer on the deal, a culmination of a long-standing relationship with the co-founders of Columbus that went as far back as the 1990s is part of the reason for this relatively unusual use of Canadian counsel to lead a non-Canadian deal. 

The initial impetus was Myles' meeting in 1991 with a Bachelor of Commerce graduate from Memorial University in Newfoundland named Brendan Paddick. Paddick was running a company called Research Associates, a market research firm in Newfoundland, when Myles recruited him to join a volunteer Board of Directors for the St. John's office of the charity Victorian Order of Nurses. 

In his first foray into the cable industry in 1992, Paddick became President and COO of a company called Regional Cablesystems. At the time, Regional was in trouble with its banking syndicate for breaches of financial covenants and required a restructuring. This is when Paddick tapped Myles's legal expertise. 

“Wayne helped me negotiate a concession package and restructuring that led to the turnaround of the company, rebranding it Persona Communications, a successful IPO in 1998 [on the Toronto Stock Exchange],” Paddick says in an email. 

After the IPO, Paddick became CEO of Persona's Canadian-wide operations and rang up Myles again for his legal work. 

“When he became CEO, we did a number of complex deals for them...in my firm which was then known as Benson Myles,” Myles says. “So we did work for Persona across Canada and established a fairly deep relationship with him and the management team.” 

In 2001, after a 
successful hostile takeover bid of seafood supplier Fishery Products International, Myles met John Risley, President of Clearwater Fine Foods Inc., who asked Myles to be one of his board nominees and legal advisors when Risley launched his raid. This was Risley's second takeover attempt of his company's major competitor, after his failed 1999 bid due to a provincial law that prevented “a 
shareholder or alliance of shareholders from owning more than 15 per cent of FPI." 

It was here that Myles introduced Paddick to Risley as a possible board nominee. From then on, the three collaborated in each others' business: Risley as an investor in Persona; Paddick as a board member of the Risley-founded Clearwater Seafoods public company; and Myles as legal strategist for both. 

During this time, in 2001, Paddick became president and CEO of Cable Bahamas, a Bahamas-based public company and cable operator, with Persona being its largest and controlling shareholder after it had acquired it in September 2002. 

Then, in 2004, Persona was sold to a US-based private equity firm in a going-private transaction (it was sold again to Bragg Communications in 2007). In 2005, leveraging their now long-standing professional relationship and Paddick's experience in the Bahamas, Paddick and Risley started Columbus International, with Myles right there acting as their “external general counsel.” 

“Wayne has essentially acted as our general counsel in an external manner, quarterbacking and staffing all of the company's legal and advisory needs as we grew from a startup in 2005, through our expansion into 42 countries in the Caribbean, Central American and Andean regions, through to our recently announced US$3-billion transaction with Cable & Wireless PLC,” Paddick, director and CEO of Columbus, says from the Bahamas, where he is set to meet prime ministers in several different countries to secure government approvals for the sale.

This latest deal – the company's largest ever – involves other external counsel that span the United States, Europe and South America, all fittingly secured by and under the guidance of this one Atlantic Canada law firm and this one lawyer who introduced the founding partners to each other. 

“Because of my relationship with Brendan – also my relationship with John Risley – from day one, I essentially have been their lead legal counsel and advisor and that led to me leading this deal to do the combination with Cable & Wireless,” Myles says. “I run all of their [Columbus] major projects, and all the external local law firms in these countries essentially report to and work through me, and even the internal Columbus counsel for certain types of things essentially report to and work as part of my team.” 

Cox & Palmer has been involved in about 90 M&A and 58 capital market transactions “over the span of our professional relationship,” Paddick says. The Atlantic Canadian firm was counsel to Columbus's US$62-million acquisition of Kelcom International in St. Lucia, St. Vincent, Antigua, and Barbardos in March 2013; its US$125-million acquisition of Promitel in Colombia, Panama, and Costa Rica in February 2014; and its US$1.25-billion public bond offering in March 2014. 

“We see this as having spent the last 10 years developing our skills and ability to organize and manage large and complex multi-jurisdictional transactions,” Myles says. “In addition to this Cable & Wireless acquisition, I've acted for Columbus in raising over US$6 billion in various debt and equity and bond offerings that were all US and foreign-based financings.” 

In this deal the law firm worked on, among other things, the due diligence exercise that involved taking back over US$1.1 billion of equity in CWC; and in preparing the CWC shareholder circular and submission to regulators of Hart-Scott-Rodino antitrust filings in the US and to the UKLA panel in the UK, according to Paddick. 

“Wayne and his team,” Paddick says, “have performed at such a high standard and have added such value for over 20 years that, notwithstanding their fees/bills, have likely never cost my company a cent.”