Rogers sells $829-million Cogeco stake to Caisse to pare debt
Canadian wireless company Rogers Communications Inc. sold its stake in a rival telecommunications operator to Quebec’s largest pension manager, raising more than $829 million to repay debt in an effort to keep its investment-grade rating.
Rogers is selling its shares in the Cogeco group to Caisse de dépôt et placement du Quebec. The private deal will allow Rogers to cut its leverage ratio to 4.7 times by the end of the year, compared with 4.9 times at the end of September.
Rogers held large stakes in Cogeco Inc. and operating unit Cogeco Communications Inc. for many years in the hope of acquiring it one day, but the Audet family, which controls both entities, rebuffed its overtures — including a hostile bid in 2020.
Instead, Rogers purchased Shaw Communications Inc. for about $20 billion. After that deal closed, Rogers was downgraded by S&P Global Ratings to BBB-, the lowest rung above junk. It’s similarly rated by Moody’s Investors Service, Fitch and DBRS Morningstar.
“This sale further demonstrates our commitment to strengthen our investment grade balance sheet and aggressively reduce our debt leverage ratio,” Tony Staffieri, Rogers’ chief executive, said in a statement.
Caisse de Depot won’t hang on to all of the Cogeco shares it’s buying from Rogers. Cogeco will repurchase some and, in the end, the Quebec pension fund will wind up with a 16.1 per cent stake in Cogeco Communications, a seller of internet, cable television and wireless services within Canada.
“Given the current prices of our stocks, which we believe are undervalued, buying back shares represents an attractive use of our capital to build shareholder value,” Cogeco CEO Philippe Jette said in a statement. S&P cut its outlook on Cogeco Communications to
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