Investors Group Acquires Q9 Networks

An investor group comprising Ontario Teachers' Pension Plan (Teachers'), BCE Inc. (Bell), Providence Equity Partners (PEP) and Madison Dearborn Partners LLC (MDCP) announced the completion of its previously announced acquisition of Q9 Networks Inc. (Q9) for a purchase price of $1.1 billion. Of this amount, $430 million was contributed by Teachers', PEP and MDCP collectively, $185 million of the equity funding was provided by Bell and a portion of the acquisition price was funded by new debt financing.

Q9 is Canada's leading provider of outsourced data centre solutions such as hosting, co-location and cloud computing services, with headquarters in Toronto and 12 data centres in British Columbia, Alberta and Ontario.

Q9 will continue to operate independently under the continuing leadership of CEO Osama Arafat and President and COO Paul Sharpe.

Upon completion of the transaction, Bell, through its Bell Business Markets unit – which provides network connectivity, data hosting and other managed services to business clients across Canada – entered into a commercial arrangement with Q9 to enable the continued growth of their respective businesses and to drive shareholder value.

Concurrently with completion of the acquisition of Q9 and execution of the commercial arrangement, Bell and its partners in the investment transaction settled the $1.2 billion Reverse Break-Fee Proceedings initiated in 2008 following termination of Bell's proposed privatization.

In consideration of the settlement, Bell received certain non-cash benefits, such as increased equity ownership, and a path to full ownership with an option at a favourable valuation to acquire the partners' entire equity interest in Q9 in the future.

Ontario Teachers' Pension Plan Board was represented in-house by Melissa Kennedy, Senior Vice President, General Counsel & Corporate Affairs; and Jeff Davis, Vice President and Associate General Counsel; and by Osler, Hoskin & Harcourt LLP. Osler also acted as joint counsel to Teachers', Providence Equity Partners, Bell and MDCP in connection with the purchase and the related debt financing. Osler also jointly represented Teachers', PEP and MDCP in connection with negotiations between those three sponsors and Bell of the commercial arrangement, shareholders agreement and certain aspects of the Reverse Break-Fee settlement. Osler's team was led by Geoff Taber and included Chad Bayne, Jeff Murray, Don Gilchrist, Jeremy Fraiberg, Blair Wiley, Jay Greenspoon, Adam Gutkin and Ryan Sakamoto (business law); Peter Franklyn, Peter Glossop and Matt Anderson (competition); Patrick Marley and Lara Friedlander (tax); Steve Luff and Timothy Watson (real estate) and Damian Rigolo (employment). The Osler team that worked on the credit facilities was led by Mike Matheson and included Joyce Bernasek and Ben Leith.

Torys LLP acted as litigation counsel to Teachers in the settlement of the Reverse Break-fee Proceedings with a team consisting of Linda Plumpton, Sheila Block and Sharon Geraghty.

PEP was represented by David Duffell and Sarah Stasny of Weil, Gotshal & Manges LLP. Greg Danilow, also of Weil, acted for PEP on the Reverse Break-Fee litigation matter.

MDCP was represented by Kirkland & Ellis LLP, including Jeff Richards in connection with the acquisition and shareholder arrangements, Rachel Cantor in connection with tax structuring issues, and Mike Wright, David Milligan and Dean Pettinga in connection with the debt financing.

Bell was represented in-house by Michel Lalande, Senior Vice-President, General Counsel; Martin Cossette, Assistant General Counsel, Corporate Development and M&A; and by Geneviève Filion, Legal Counsel. Bell was also represented by Blake, Cassels & Graydon LLP with respect to competition law matters by a team comprising Brian Facey and Mark Graham and by Norton Rose Canada LLP with respect to certain matters related to the settlement of the Reverse Break-fee Proceedings and in connection with negotiations as between Bell and the three sponsors. The Norton Rose team comprised Pierre Bienvenu and Sophie Perreault (litigation) and Solomon Sananes and Catherine De Laboursodière (business law).

Goodmans LLP represented BMO Capital Markets Corp. in connection with the acquisition financing with a team led by David Nadler (finance) and included Dan Dedic and Emily Ting (finance); Ken Herlin (real estate) and Mitchell Sherman (tax).

Q9 was represented by Victoria Coombs, General Counsel & Corporate Secretary and McCarthy Tétrault LLP acted for ABRY Partners and Q9 in connection with the sale. The McCarthy Tétrault team was led by Andrew Parker and consisted of Robert Hansen, Lesley Milroy, Stephanie Yarmo, Jennifer Organ and Victoria Seth (business law); James Morand (tax); Gordon Baird and Ana Badour (financial services); Oliver Borgers (competition) and Jamie Orzech (real estate).