Telesystem International Wireless Inc. Completes Major Restructuring

On February 28, 2002, Telesystem International Wireless Inc. completed a major restructuring with a view to harmonizing the interests of its various stakeholders. This was accomplished by reducing TIW’s financial commitments, de-leveraging its balance sheet, simplifying its capital structure and repatriating the share capital of its Eastern European subsidiary, ClearWave N.V., in its asset base.

The multi-step restructuring took several months to complete. TIW first reduced its funding obligations when Dolphin Telecom PLC and some subsidiaries filed for protection from creditors. Senior debt was then restructured through a renegotiation of TIW’s senior secured credit facility and the purchase of US $547 million of high-yield debt. This debt restructuring resulted in the exchange of 99.9% of all outstanding high-yield notes for new Senior Guaranteed Notes and US $50 million in cash. TIW also renegotiated the terms of its senior secured credit facility under a credit agreement with a CIBC-led lending syndicate. Finally, TIW undertook a comprehensive equity recapitalization, negotiated with major stakeholders J.P. Morgan Partners LLC, Hutchinson Whampoa Ltd., Capital Communications CDPQ Inc. and Telesystem Ltd. This complex final stage included issuer bids for TIW’s outstanding equity subordinate debentures and for its outstanding units (each containing one Class A subordinate voting share of ClearWave), as well as the issuance of warrants and special warrants and the conversion of certain convertible debentures and all outstanding multiple voting shares into subordinate voting shares.

TIW’s issuer bid for its outstanding units were amended pursuant to an order obtained by Highfields Capital Ltd. in the Ontario Superior Court, although Highfields’ subsequent argument that the Ontario court order constituted a material change requiring an extension of the equity subordinate debenture issuer bid was rejected by the Quebec Securities Commission, to whose jurisdiction the Ontario Securities Commission has deferred in what had been a joint hearing of the two Commissions. Both issuer bids were thus successfully closed.

Acting for TIW were Margaret Zwarts (general counsel), Hélène Hallak (senior legal counsel) and Grégoire Baillargeon. External counsel, from Fasken Martineau, included Robert Paré, Gilles Leclerc, Andrew Ford, Marie-Josée Neveu, Daniel Yelin and Catherine Isabelle (corporate/securities), Xeno Martis and Angela Onesi (banking). Claude Auger and Thomas Copeland (tax), John Campion, Bill Hourigan, David Housman, Marianne Messier and Stéphanie Lapierre (securities litigation), and Serge Guérette, Alan Riendeau and Michael Fitch (insolvency). United States counsel to TWI was led by David P. Falck and Douglas Ray of the New York office of Pillsbury Winthrop LLP.

Ogilvy Renault’s Norman Steinberg, Christine Dubé, Clemens Mayr and Michelle Setlakwe acted for independent committee of the TIW board. Capital Communications CDPQ Inc. was represented by general counsel Robert Côté and by André Goyer, Benjamin Silver and Joel Cabelli of McCarthy Tétrault . J.P. Morgan Partners LLC was represented by Harvey M. Eisenberg, Gregory A. Gilbert, Mark E. DeAngelis and Charles M. Owen of O’Sullivan LLP in New York, with Stikeman Elliot advising on Canadian legal matters. Hutchison Whampoa was represented by Stikeman Elliot, with a team led by William A. Scott and including Nathalie Mercure, Loreto Grimaldi and Andrew Wong (corporate/securities), Peter Hamilton (bank regulatory), Paul Collins and Jason Gudofsky (competition), Lianne Miller and Kevin Kelly (tax) and Peter Howard, Louis P. Bélanger, Dominique Menard and Timothy Banks (securities litigation). Telesystem Ltd. was represented by Michel Cordeau (VP legal affairs) with the assistance of Eric Levy and Paul Franco of Heenan Blaikie LLP.

Highfields was represented by Patricia Jackson and David Chernos of Torys LLP, with assistance from James Turner on securities matters. James Woods of Woods & Partners of Montreal represented Highfields before the QSC. Perry Capital, and intervenor in the Ontario court proceedings, was represented by Terrence O’Sullivan of Lax O’Sullivan Scott LLP.

UBS Bunting Warburg Inc. and BMO Nesbitt Burns inc. acted as financial advisors to TIW and as dealer managers for the issuer bids. TD Securities Ltd., the financial advisor to the independent committee of the TIW board, was represented by Sylvain Cossette and Marie-Christine Lemerise of Davies Ward Phillips & Vineberg LLP. CIBC was represented by Daniel Francoeur and Claire Zikovsky of Stikeman Elliot.