suppl
Filed
pursuant to General Instruction II.L of Form
F-10
File
No. 333-161320
This
preliminary prospectus supplement is not yet final for the
purposes of the sale of securities. Information contained in
this preliminary prospectus supplement is not complete and may
have to be amended.
No securities regulatory
authority has expressed an opinion about these securities and it
is an offence to claim otherwise.
This prospectus supplement,
together with the short form base shelf prospectus dated
September 3, 2009 to which it relates, as amended or
supplemented, and each document incorporated or deemed to be
incorporated by reference in the short form base shelf
prospectus, constitutes a public offering of securities offered
pursuant hereto only in the jurisdictions where they may be
lawfully offered for sale and therein only by persons permitted
to sell such securities.
Information has been
incorporated by reference in this prospectus supplement and the
accompanying short form base shelf prospectus dated
September 3, 2009 from documents filed with securities
commissions or similar authorities in Canada.
Copies of the
short form base shelf prospectus and documents incorporated by
reference therein may be obtained on request without charge from
the Senior Vice-President, Chief General Counsel &
Corporate Secretary of TELUS at 3777 Kingsway, Burnaby, British
Columbia, V5H 3Z7 (telephone 604.697.8029). Copies of these
documents are also available on the System for Electronic
Document Analysis and Retrieval of the Canadian Securities
Administrators (SEDAR), at www.sedar.com.
PRELIMINARY PROSPECTUS SUPPLEMENT
To a Short Form Base Shelf Prospectus dated
September 3, 2009
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New
Issue |
December 1, 2009
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TELUS Corporation
$ l l % Notes,
Series CG due December 4, 2019
(unsecured)
The l % Notes,
Series CG (the Notes) of TELUS Corporation
(TELUS or the Company) are offered under
this prospectus supplement (the Offering).
The Notes will bear interest from their issuance date at the
rate
of l % per
annum payable in equal semi-annual instalments on June 4
and December 4 of each year. The first interest payment in
the amount of
$ l will
be due on June 4, 2010. See Details of the
Offering. The effective yield on the Notes if held to
maturity will
be l %.
TELUS maintains its registered office at Floor 21,
3777 Kingsway, Burnaby, British Columbia, V5H 3Z7 and
its executive office at Floor 8, 555 Robson Street,
Vancouver, British Columbia, V6B 3K9.
This Offering is being made in all the provinces of Canada and
in the United States. See Plan of Distribution.
The Notes offered hereby will generally be qualified
investments under the Income Tax Act (Canada). See
Eligibility for Investment.
This Offering is made by a Canadian issuer that is permitted,
under a multijurisdictional disclosure system adopted by the
United States, to prepare this prospectus supplement, and the
short form base shelf prospectus to which it relates, in
accordance with the disclosure requirements of Canada.
Prospective investors in the United States should be aware that
such requirements are different from those of the United States.
The financial statements incorporated herein have been prepared
in accordance with Canadian generally accepted accounting
principles, and may be subject to Canadian auditing and auditor
independence standards, and thus may not be comparable to
financial statements of United States companies.
Prospective investors in the United States should be aware
that the acquisition of the Notes described herein may have tax
consequences both in the United States and in Canada. Such
consequences for investors who are resident in, or citizens of,
the United States may not be fully described herein.
The enforcement by investors of civil liabilities under the
United States federal securities laws may be affected adversely
by the fact that the Company is incorporated or organized under
the laws of the Province of British Columbia, that some or all
of its officers and directors may be residents of Canada, that
some or all of the agents or experts named herein may be
residents of Canada, and that all or a substantial portion of
the assets of the Company and such persons may be located
outside the United States.
The securities offered pursuant to this prospectus supplement
have not been approved or disapproved by the United States
Securities and Exchange Commission nor has the United States
Securities and Exchange Commission passed upon the accuracy or
adequacy of this prospectus supplement or the short form base
shelf prospectus to which this supplement relates. Any
representation to the contrary is a criminal offense.
Brian Canfield, a director of the Company who is signing the
certificate attached hereto under Part 5 of NI
41-101,
resides outside of Canada. Although Mr. Canfield has
appointed TELUS Corporation, 3777 Kingsway, Burnaby,
British Columbia as his agent for service of process in Canada,
it may not be possible for investors to enforce judgments
obtained in Canada against Mr. Canfield.
The Notes will be redeemable, at the option of the Company at
any time, in whole or in part, at the redemption price described
herein.
In the event of certain changes affecting Canadian withholding
taxes, the Notes may be redeemed at the option of the Company,
in whole but not in part, at 100% of the principal amount of the
Notes plus accrued and unpaid interest to the date of redemption.
The Company will be required to make an offer to repurchase the
Notes at a price equal to 101% of their principal amount plus
accrued and unpaid interest to the date of repurchase upon the
occurrence of a Change of Control Triggering Event. See
Details of the Offering Repurchase upon Change
of Control Triggering Event.
The Notes will be unsecured and unsubordinated obligations of
the Company, will rank pari passu in right of payment
with all existing and future unsecured and unsubordinated
obligations of the Company and will be senior in right of
payment to all existing and future subordinated indebtedness of
the Company, but will be effectively subordinated to all
existing and future obligations of, or guaranteed by, the
Companys subsidiaries.
An investment in the Notes bears certain risks. See
Risk Factors.
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Price to
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Net Proceeds
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Public
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Agents
Fees(1)
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to the
Company(1)(2)(3)
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Series CG Notes, per $1,000 principal amount
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$ l
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$ l
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$ l
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Total
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$ l
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$ l
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$ l
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(1)
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TELUS has agreed to indemnify the
Agents (as defined herein) against certain liabilities. See
Plan of Distribution.
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(2)
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Consisting of the purchase price
of l % (or
$ l )
less the Agents fees in respect of the Notes.
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(3)
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Before deducting expenses of the
issue estimated at
$ l
which, together with the Agents fees, will be paid from
the general funds of the Company.
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There is no market through which the Notes may be sold and
purchasers may not be able to resell the Notes purchased under
this prospectus supplement and the short form base shelf
prospectus to which it relates. This may affect the pricing of
the Notes in the secondary market, the transparency and
availability of trading prices, the liquidity of the Notes, and
the extent of issuer regulation. See Risk
Factors.
Scotia Capital Inc., CIBC World Markets Inc., BMO Nesbitt Burns
Inc., RBC Dominion Securities Inc., TD Securities Inc., HSBC
Securities (Canada) Inc., National Bank Financial Inc.,
Desjardins Securities Inc. and Cannacord Financial Ltd.
(collectively, the Agents), as agents, conditionally
offer the Notes subject to prior sale, on a best efforts basis
if, as and when issued and sold by TELUS in accordance with the
conditions of the agency agreement described under Plan of
Distribution and subject to the approval of certain legal
matters on behalf of TELUS by Bennett Jones LLP of Toronto,
Ontario and by Skadden, Arps, Slate, Meagher & Flom LLP of
New York, New York and on behalf of the Agents by Osler, Hoskin
& Harcourt LLP of Toronto, Ontario and New York, New York.
Subscriptions will be received subject to rejection or allotment
in whole or in part and the right is reserved to close the
subscription books at any time without notice. It is expected
that the Notes will be available for delivery in book-entry form
only on closing of this Offering, which is expected to occur on
or about December 4, 2009 or such other date as may be
agreed upon by TELUS and the Agents.
In connection with the Offering, the Agents may, subject to
applicable law, over-allot or effect transactions which
stabilize or maintain the market price of the Notes offered at
levels other than those that might otherwise prevail on the open
market. Such transactions, if commenced, may be discontinued at
any time. See Plan of Distribution.
Each of the Agents, other than Cannacord Financial Ltd., is
an affiliate of a financial institution which is a lender to the
Company under a $2 billion unsecured credit facility with a
syndicate of 18 financial institutions (the 2007
Credit Facility). Each of the Agents, other than TD
Securities Inc., National Bank Financial Inc., Desjardins
Securities Inc. and Cannacord Financial Ltd., is an affiliate of
a financial institution which is a lender to the Company under a
$300 million unsecured credit facility with a syndicate of
five financial institutions (the 2008 Credit
Facility). Additionally, each of the Agents, other than
HSBC Securities (Canada) Inc., Desjardins Securities Inc. and
Cannacord Financial Ltd., is an affiliate of a financial
institution that is a counterparty to certain cross-currency
interest rate swaps with the Company. Consequently, the Company
may be considered to be a connected issuer of each such Agent
for purposes of the securities legislation of certain
Canadian provinces. See Plan
of Distribution.
S-2
TABLE OF
CONTENTS
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Page
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S-3
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S-4
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S-4
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S-6
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S-10
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S-12
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S-13
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S-14
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S-14
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S-14
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S-15
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S-22
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S-23
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S-23
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S-27
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S-28
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S-29
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S-30
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CURRENCY
Unless otherwise indicated, all references to $ or
dollar in this prospectus supplement refer to the
Canadian dollar and U.S.$ and U.S.
dollar refer to the United States dollar. For information
purposes, the noon exchange rate as reported by the Bank of
Canada on November 30, 2009 was U.S.$1.00 = $1.0574.
DOCUMENTS
INCORPORATED BY REFERENCE
This prospectus supplement is deemed to be incorporated by
reference into the accompanying short form base shelf prospectus
of TELUS dated September 3, 2009 (the short form base
shelf prospectus) solely for the purposes of this
Offering. Other documents are also incorporated or deemed to be
incorporated by reference into the short form base shelf
prospectus and reference should be made to the short form base
shelf prospectus for full particulars thereof.
The following documents, which have been filed by the Company
with securities commissions or similar authorities in Canada,
are also specifically incorporated by reference into and form an
integral part of the short form base shelf prospectus, as
supplemented by this prospectus supplement:
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(a)
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the annual information form of the Company dated March 13,
2009 for the year ended December 31, 2008;
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(b)
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the audited consolidated financial statements of the Company as
at and for the years ended December 31, 2008 and 2007 (the
Annual Financial Statements) together with the
report of the auditors thereon and the notes thereto;
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(c)
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Managements Discussion and Analysis of financial results
for the year ended December 31, 2008;
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(d)
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the unaudited interim consolidated financial statements of the
Company as at and for the three-month and nine-month periods
ended September 30, 2009 and September 30, 2008
together with the notes thereto;
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(e)
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Managements Discussion and Analysis of financial results
for the three-month and nine-month periods ended
September 30, 2009; and
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(f)
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the Information Circular dated March 13, 2009 prepared in
connection with the Companys annual general meeting held
on May 7, 2009.
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Any statement contained in the short form base shelf
prospectus, in this prospectus supplement or in any document
incorporated or deemed to be incorporated by reference in the
short form base shelf prospectus for the purpose of this
Offering shall be deemed to be modified or superseded, for
purposes of this prospectus supplement,
S-3
to the extent that a statement contained herein or in the
short form base shelf prospectus or in any other subsequently
filed document which also is or is deemed to be incorporated by
reference herein or in the short form base shelf prospectus
modifies or supersedes such prior statement. The modifying or
superseding statement need not state that it has modified or
superseded a prior statement or include any other information
set forth in the document which it modifies or supersedes. The
making of such a modifying or superseding statement shall not be
deemed an admission for any purposes that the modified or
superseded statement, when made, constituted a
misrepresentation, an untrue statement of a material fact or an
omission to state a material fact that is required to be stated
or that is necessary to make a statement not misleading in light
of the circumstances in which it was made. Any statement so
modified or superseded shall not constitute a part of this
prospectus supplement, except as so modified or superseded.
WHERE YOU
CAN FIND MORE INFORMATION
Information has been incorporated by reference in the
accompanying short form base shelf prospectus from documents
filed with securities commissions or similar authorities in
Canada. Copies of this prospectus supplement, together with the
short form base shelf prospectus and documents incorporated by
reference therein, may be obtained on request without charge
from the Senior Vice-President, Chief General Counsel and
Corporate Secretary of TELUS at 3777 Kingsway, Burnaby,
British Columbia, V5H 3Z7 (telephone 604.697.8029). Copies
of these documents are available on the System for Electronic
Document Analysis and Retrieval of the Canadian Securities
Administrators (SEDAR), at www.sedar.com.
In addition to its continuous disclosure obligations under the
securities laws of the provinces of Canada, TELUS is subject to
the information requirements of the United States Securities
Exchange Act of 1934, as amended, and in accordance
therewith files reports and other information with the United
States Securities and Exchange Commission (the SEC).
Under a multijurisdictional disclosure system adopted by the
United States, such reports and other information may be
prepared in accordance with the disclosure requirements of
Canada, which requirements are different from those of the
United States. Such reports and other information, when filed by
TELUS in accordance with such requirements, can be inspected and
copied at the public reference facilities maintained by the SEC
at 100 F Street, N.E., Washington, D.C., 20549.
Copies of such material can be obtained at prescribed rates from
such public reference facilities of the SEC at
100 F Street, N.E., Washington, D.C., 20549. In
addition, such materials are also available to the public on the
SECs website at www.sec.gov. Certain securities of TELUS
are listed on the NYSE, and reports and other information
concerning TELUS can be inspected at the offices of the NYSE,
20 Broad Street, New York, New York, 10005.
FORWARD-LOOKING
STATEMENTS
This prospectus supplement and the short form base shelf
prospectus to which it relates, together with the documents
incorporated by reference herein and therein, contain statements
about expected future events and financial and operating results
of TELUS that are forward-looking. By their nature,
forward-looking statements require the Company to make
assumptions, and forward-looking statements are subject to
inherent risks and uncertainties. There is significant risk that
assumptions, predictions and other forward-looking statements
will not prove to be accurate. Readers are cautioned not to
place undue reliance on forward-looking statements as a number
of factors could cause actual future results, conditions,
actions or events to differ materially from the targets,
expectations, estimates or intentions expressed. Except as
required by law, the Company disclaims any intention or
obligation to update or revise any forward-looking statements,
and reserves the right to change, at any time at its sole
discretion, its current practice of updating annual targets and
guidance. Annual targets, revised guidance and related
assumptions for 2009, and a preliminary assessment of expected
2010 capital expenditure levels, are described in
Section 9: Annual guidance for 2009 of the Companys
Managements Discussion and Analysis of financial results
for the three-month and nine month periods ended
September 30, 2009.
Factors that could cause actual results to differ materially
include, but are not limited to:
Competition (including more active price competition; the
likelihood of new wireless competitors beginning to offer
services in late 2009 and into 2010 as a result of the 2008
advanced wireless services (AWS) spectrum auction); as well as
variability in subscriber acquisition and retention costs that
are dependent on subscriber loading and retention volumes,
smartphone sales and subsidy levels, and TELUS TV installation
costs); economic growth and fluctuations (including
strength and persistence of the economic recovery in Canada, and
pension performance, funding and expenses); capital
expenditure levels (increased in 2009 and potentially in
future years due to the Companys wireline broadband
initiatives,
S-4
fourth generation (4G) wireless deployment strategy and any new
Industry Canada wireless spectrum auctions); financing and
debt requirements (including ability to carry out
refinancing activities and fund share repurchases); tax
matters (including acceleration or deferral of required
payments of significant amounts of cash taxes); human
resource developments; (including collective bargaining in
the TELUS Québec region); business integrations and
internal reorganizations (including ability to successfully
implement cost reduction initiatives); technology
(including reliance on systems and information technology,
broadband and wireless technology options, choice of suppliers
and suppliers ability to maintain and service their
product lines, expected technology and evolution path and
transition to 4G technology, expected future benefits and
performance of high-speed packet access (HSPA)/long-term
evolution (LTE) wireless technology, successful implementation
of the wireless network build and sharing arrangement with Bell
Canada to achieve cost efficiencies and reduce deployment risks,
successful deployment and operation of new wireless networks and
successful introduction of new products, (such as the Apple
iPhone and other new HSPA devices), new services and supporting
systems); regulatory approvals and developments
(including interpretation and application of tower sharing and
roaming rules, the design and impact of future spectrum
auctions, and possible changes to foreign ownership
restrictions); process risks (including conversion of
legacy systems and billing system integrations, and
implementation of large complex enterprise deals that may be
adversely impacted by available resources and degree of
co-operation
from other service providers); health, safety and
environmental developments; litigation and legal matters;
business continuity events (including manmade and natural
threats); any future acquisitions or divestitures; and
other risk factors discussed herein or listed from time
to time in TELUS reports and public disclosure documents
including its annual report, annual information form, financial
statements, managements discussion and analysis, and other
filings with securities commissions in Canada (on SEDAR at
www.sedar.com) and in its filings in the United States,
including
Form 40-F
(on EDGAR at www.sec.gov).
S-5
SUMMARY
The following summary is qualified in its entirety by, and
should be read in conjunction with, the more detailed
information contained elsewhere in this prospectus supplement
and the accompanying short form base shelf prospectus to which
it relates and in the documents incorporated by reference herein
and therein. Unless the context otherwise indicates, references
in this prospectus supplement to TELUS or the
Company are references to TELUS Corporation,
its consolidated subsidiaries and predecessor companies. Except
as otherwise indicated, all dollar amounts are expressed in
Canadian dollars and references to Cdn$ or
$ are to Canadian dollars.
THE
COMPANY
TELUS is the largest incumbent telecommunications company in
western Canada and one of the largest telecommunications
companies in Canada. It provides a wide range of wireline and
wireless telecommunications products and services including
data, Internet protocol (IP), voice, video and
entertainment services.
RECENT
DEVELOPMENTS
Financial
Results
On November 6, 2009, TELUS announced its financial results
for the quarter ended September 30, 2009. The summary
financial data presented below as at and for the years ended
December 31, 2008 and 2007 has been derived from the Annual
Financial Statements. The summary financial data presented below
as at and for the nine months ended September 30, 2009 and
2008 has been derived from the unaudited interim financial
statements of the Company for the three-month and nine-month
periods ended September 30, 2009 and September 30,
2008.
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As at, or for the years ended
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As at, or for the nine-month periods ended
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December 31
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September 30
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2008
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2007
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2009
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2008
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($ in millions except per share amounts)
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($ in millions except per share amounts)
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Operating revenues
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9,653
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9,074
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7,163
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7,199
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Operations expense
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5,815
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5,465
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4,348
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4,336
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Restructuring costs
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59
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20
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113
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21
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Financing costs and other expense
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499
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476
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324
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370
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Income taxes
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436
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233
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251
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348
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Net income
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1,131
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1,265
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846
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846
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Other comprehensive income
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(26
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74
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25
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(9
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Comprehensive income
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1,105
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1,339
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871
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837
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Income per Common Share and Non-Voting Share basic
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3.52
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3.79
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2.65
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2.62
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Income per Common Share and Non-Voting Share diluted
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3.51
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3.76
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2.65
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2.61
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Dividends declared per Common Share and Non-Voting Share
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1.825
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1.575
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1.425
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1.35
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Total assets
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19,021
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16,849
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19,292
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18,782
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Current maturities of long-term debt
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4
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5
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82
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5
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Non-current portion of long-term debt
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6,348
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4,584
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5,809
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6,033
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Deferred hedging and other long-term liabilities
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1,103
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1,507
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1,393
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1,394
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7,451
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6,091
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7,202
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7,427
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Future income tax liabilities
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1,672
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1,510
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1,914
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1,812
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Shareholders equity
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Common Share and Non-Voting Share equity
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7,085
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6,829
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7,513
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6,969
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Non-controlling interests
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23
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26
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20
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22
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7,108
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6,855
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7,533
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6,991
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S-6
TELUS intends to give notice
on l of
a
partial l %
redemption, on a pro rata basis,
on l of
U.S.$ l
million principal amount of its outstanding
U.S.$1.945 billion 8% Notes due June 1, 2011. The
redemption price will be based on the yield for a
U.S. Treasury security with the equivalent maturity plus
30 basis points, as provided in the trust indenture
pursuant to which such Notes were issued, but in no case will
the redemption price be less than par. Note holders will also
receive accrued interest to
the l redemption
date. The estimated redemption price for the notes to be
redeemed (net of the
U.S.$ l
million principal amount of the notes to be redeemed owned
indirectly by the Company), excluding accrued interest, is
approximately
U.S.$ l
million and the estimated payment required to terminate the
associated swaps is approximately
$ l .
Unanticipated developments or circumstances beyond the
Companys control could affect its intended redemption of
the notes and there is no assurance that the redemption will be
completed. The Company will only become obligated to complete
the redemption once it gives notice of redemption in accordance
with the trust indenture governing the notes.
Costs and non-cash write-downs related to the early redemption
of
U.S.$ l million
principal amount of the U.S.$1.945 billion 8% Notes due
June 1, 2011 are expected to result in increased financing
charges which will have an after tax impact on the Company in
the fourth quarter of 2009 of
approximately l cents
per share, which is not reflected in TELUS
November 6, 2009 guidance update. The U.S.$8% Notes were
swapped at issuance into a Canadian dollar liability with an
effective yield of 8.493%. The Company has also revised its
expectations for 2009 restructuring expenses from approximately
$160 million to approximately $190 million to reflect
increased operational efficiency activities.
S-7
THE
OFFERING
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Issue |
|
$ l aggregate
principal amount due December 4, 2019. |
|
Interest |
|
l %
per annum payable in equal semi-annual instalments on
June 4 and December 4 of each year. The first interest
payment in the amount of
$ l
will be due on June 4, 2010. |
|
Maturity |
|
December 4, 2019. |
|
Optional Redemption |
|
The Notes are redeemable at any time. The Notes may be redeemed
at the option of the Company, in whole at any time, or in part
from time to time, on not fewer than 30 nor more than
60 days prior notice, at a redemption price equal to
the greater of (a) the Discounted Value (as defined in
Details of the Offering Optional
Redemption) of the Notes, or (b) 100% of the
principal amount thereof. In addition, accrued and unpaid
interest, if any, will be paid to the date fixed for redemption.
In the event of certain changes to the tax laws of Canada or any
province thereof, TELUS may, under certain circumstances, redeem
the Notes at 100% of the principal amount, together with accrued
and unpaid interest if any, and Additional Amounts
(as defined below) if any, through to the redemption date.
See Details of the Offering Tax
Redemption. |
|
Change of Control |
|
The Company will be required to make an offer to repurchase the
Notes at a price equal to 101% of their principal amount plus
accrued and unpaid interest to the date of repurchase upon the
occurrence of a Change of Control Triggering Event. See
Details of the Offering Repurchase upon Change
of Control Triggering Event. |
|
Certain Covenants |
|
The Indenture (as defined in Details of the
Offering General) pursuant to which the Notes
will be issued will contain certain covenants that, among other
things, limit the ability of the Company and certain material
subsidiaries to grant security in respect of indebtedness and to
enter into sale and lease-back transactions and limit the
ability of such subsidiaries to incur new indebtedness. See
Details of the Offering Negative Pledge,
Limitation on Restricted Subsidiary Indebtedness,
and Limitation on Sale and Lease-Back Transactions
in this prospectus supplement. |
|
Use of Proceeds |
|
The total net proceeds to be received by the Company from this
Offering are estimated to be approximately
$ l after
payment of fees to the Agents but before deduction of the
expenses of this Offering. The net proceeds of the sale of the
Notes offered hereby will be used to fund the redemption
on l of
U.S.$ l
million principal amount of the Companys outstanding
U.S.$1.945 billion 8% Notes due June 1, 2011, for
payments required to terminate cross-currency interest rate
swaps associated with the notes to be redeemed and any excess
for general corporate purposes, including increasing working
capital (and, pending any such use, investing in bank deposits
and short-term marketable securities). The estimated redemption
price for the notes to be redeemed (net of the
U.S.$ l
million principal amount of the notes to be redeemed owned
indirectly by the Company), excluding accrued interest, is
approximately
U.S.$ l
million and the estimated payment required to terminate the
associated swaps is approximately
$ l . |
S-8
RISK
FACTORS
Prospective investors in the Notes should consider carefully the
matters set forth in the section entitled Risk
Factors in this prospectus supplement and the section
entitled Risks and risk management in
Managements Discussion and Analysis of financial results
for the year ended December 31, 2008 and in
Managements Discussion and Analysis of financial results
in respect of the Companys unaudited interim financial
statements filed thereafter, each of which sections is being
incorporated by reference herein.
S-9
TELUS
CORPORATION
TELUS was incorporated under the Company Act (British
Columbia) (the BC Company Act) on
October 26, 1998 under the name BCT.TELUS Communications
Inc. (BCT). On January 31, 1999, pursuant to a
court-approved plan of arrangement under the Canada Business
Corporations Act among BCT, BC TELECOM Inc. (BC
TELECOM) and the former Alberta based
TELUS Corporation (TC), BCT acquired all of the
shares of each of BC TELECOM and TC in exchange for common
shares and non-voting shares of BCT, and BC TELECOM was
dissolved. On May 3, 2000, BCT changed its name to
TELUS Corporation and in February 2005, the Company
transitioned under the Business Corporations Act
(British Columbia), successor to the BC Company
Act. TELUS maintains its registered office at Floor 21,
3777 Kingsway, Burnaby, British Columbia, and its executive
office at Floor 8, 555 Robson Street, Vancouver,
British Columbia, V6B 3K9.
TELUS is a leading national telecommunications company in
Canada, offering a wide range of wireline and wireless
communications products and services including data, voice and
entertainment.
As at December 31, 2008, the only material subsidiary of
TELUS was TELUS Communications Inc. (TCI), being the
only subsidiary which owned assets that constituted more than
10 per cent of the consolidated assets of TELUS as at
December 31, 2008 and generated sales and operating
revenues that exceeded 10 per cent of the consolidated
sales and operating revenues of TELUS for the year ended
December 31, 2008.
TELUS wireline and wireless businesses were formerly
located in TCI and TELE-MOBILE Company
(TELE-MOBILE), respectively. In 2005, TELUS
announced the merger of those segments into a single operating
structure (the wireline-wireless merger). This was partly
effected by way of a legal entity restructure on March 1,
2006 (the 2006 legal entity restructure), at which
time TELUS combined its wireline and wireless businesses into
TELUS Communications Company (TCC). TCC is a
partnership organized under the laws of B.C. whose partners are
TCI and TELE-MOBILE. Immediately prior to the 2006 legal entity
restructure, 3817873 Canada Inc., a partner in TELE-MOBILE, was
continued into Alberta as 1219723 Alberta ULC.
As part of a year-end internal reorganization in 2008, Emergis
Inc. (Emergis), a TELUS subsidiary acquired in
January 2008, became a partner of TELE-MOBILE. In addition,
TELUS Services Inc. and TELUS Communications (Québec) Inc.
converted their shareholding in TCI from preferred shares to
ordinary shares.
S-10
The following organization chart sets forth the relationships
between these subsidiaries and partnerships, as well as their
respective jurisdictions of incorporation or establishment and
TELUS ownership:
S-11
RECENT
DEVELOPMENTS
Financial
Results
On November 6, 2009, TELUS announced its financial results
for the quarter ended September 30, 2009. The summary
financial data presented below as at and for the years ended
December 31, 2008 and 2007 has been derived from the Annual
Financial Statements. The summary financial data presented below
as at and for the nine months ended September 30, 2009
and 2008 has been derived from the unaudited interim financial
statements of the Company for the three month and nine-month
periods ended September 30, 2009 and September 30,
2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at, or for the years ended
|
|
|
As at, or for the nine-month periods ended
|
|
|
|
December 31
|
|
|
September 30
|
|
|
|
2008
|
|
|
2007
|
|
|
2009
|
|
|
2008
|
|
|
|
($ in millions except per share amounts)
|
|
|
($ in millions except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenues
|
|
|
9,653
|
|
|
|
9,074
|
|
|
|
7,163
|
|
|
|
7,199
|
|
Operations expense
|
|
|
5,815
|
|
|
|
5,465
|
|
|
|
4,348
|
|
|
|
4,336
|
|
Restructuring costs
|
|
|
59
|
|
|
|
20
|
|
|
|
113
|
|
|
|
21
|
|
Financing costs and other expense
|
|
|
499
|
|
|
|
476
|
|
|
|
324
|
|
|
|
370
|
|
Income taxes
|
|
|
436
|
|
|
|
233
|
|
|
|
251
|
|
|
|
348
|
|
Net income
|
|
|
1,131
|
|
|
|
1,265
|
|
|
|
846
|
|
|
|
846
|
|
Other comprehensive income
|
|
|
(26
|
)
|
|
|
74
|
|
|
|
25
|
|
|
|
(9
|
)
|
Comprehensive income
|
|
|
1,105
|
|
|
|
1,339
|
|
|
|
871
|
|
|
|
837
|
|
Income per Common Share and Non-Voting Share basic
|
|
|
3.52
|
|
|
|
3.79
|
|
|
|
2.65
|
|
|
|
2.62
|
|
Income per Common Share and Non-Voting Share diluted
|
|
|
3.51
|
|
|
|
3.76
|
|
|
|
2.65
|
|
|
|
2.61
|
|
Dividends declared per Common Share and Non-Voting Share
|
|
|
1.825
|
|
|
|
1.575
|
|
|
|
1.425
|
|
|
|
1.35
|
|
Total assets
|
|
|
19,021
|
|
|
|
16,849
|
|
|
|
19,292
|
|
|
|
18,782
|
|
Current maturities of long-term debt
|
|
|
4
|
|
|
|
5
|
|
|
|
82
|
|
|
|
5
|
|
Non-current portion of long-term debt
|
|
|
6,348
|
|
|
|
4,584
|
|
|
|
5,809
|
|
|
|
6,033
|
|
Deferred hedging and other long-term liabilities
|
|
|
1,103
|
|
|
|
1,507
|
|
|
|
1,393
|
|
|
|
1,394
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,451
|
|
|
|
6,091
|
|
|
|
7,202
|
|
|
|
7,427
|
|
Future income tax liabilities
|
|
|
1,672
|
|
|
|
1,510
|
|
|
|
1,914
|
|
|
|
1,812
|
|
Shareholders equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Share and Non-Voting Share equity
|
|
|
7,085
|
|
|
|
6,829
|
|
|
|
7,513
|
|
|
|
6,969
|
|
Non-controlling interests
|
|
|
23
|
|
|
|
26
|
|
|
|
20
|
|
|
|
22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,108
|
|
|
|
6,855
|
|
|
|
7,533
|
|
|
|
6,991
|
|
TELUS intends to give notice
on l of
a
partial l %
redemption, on a pro rata basis,
on l of
U.S.$ l
million principal amount of its outstanding
U.S.$1.945 billion 8% Notes due June 1, 2011. The
redemption price will be based on the yield for a
U.S. Treasury security with the equivalent maturity plus
30 basis points, as provided in the trust indenture
pursuant to which such Notes were issued, but in no case will
the redemption price be less than par. Note holders will also
receive accrued interest to
the l redemption
date. The estimated redemption price for the notes to be
redeemed (net of the
U.S.$ l
million principal amount of the notes to be redeemed owned
indirectly by the Company), excluding accrued interest, is
approximately
U.S.$ l
million and the estimated payment required to terminate the
associated swaps is approximately
$ l .
Unanticipated developments or circumstances beyond the
Companys control could affect its intended redemption of
the notes and there is no assurance that the redemption will be
completed. The Company will only become obligated to complete
the redemption once it gives notice of redemption in accordance
with the trust indenture governing the notes.
Costs and non-cash write-downs related to the early redemption
of
U.S.$ l million
principal amount of the U.S.$1.945 billion 8% Notes due
June 1, 2011 are expected to result in increased financing
charges which will have an after tax impact on the Company in
the fourth quarter of 2009 of
approximately l cents
per share, which is not reflected in TELUS
November 6, 2009 guidance update. The U.S.$8% Notes were
swapped at issuance into a Canadian dollar liability with an
effective yield of 8.493%. The Company has also revised its
expectations for 2009 restructuring expenses from approximately
$160 million to approximately $190 million to reflect
increased operational efficiency activities.
S-12
CONSOLIDATED
CAPITALIZATION
The following table sets forth the cash and temporary
investments, net, and the capitalization of TELUS as at
September 30, 2009, on an actual basis and on an as
adjusted basis to give effect to this Offering, the redemption
of
U.S.$ l million
principal amount of the Companys outstanding
U.S.$1.945 billion 8% Notes due June 1, 2011 and the
payments required to terminate cross-currency interest rate
swaps associated with the notes to be redeemed as though they
had occurred on such date. This table should be read in
conjunction with the Annual Financial Statements and the
unaudited interim financial statements of the Company for the
three month and nine-month periods ended September 30,
2009, together with the notes thereto. All U.S. dollar amounts
have been translated into Canadian dollars based on the monthly
closing rate of exchange as reported by the Bank of Canada on
September 30, 2009 (U.S.$1.00 = $1.0707).
|
|
|
|
|
|
|
|
|
|
|
As at September 30, 2009
|
|
|
|
Actual
|
|
|
Adjusted
|
|
|
|
(millions)
|
|
|
Cash and temporary investments, net
|
|
$
|
34
|
|
|
$
|
l
|
|
|
|
|
|
|
|
|
|
|
Long-term debt and capital lease obligations
|
|
|
|
|
|
|
|
|
Series CG Notes offered hereby
|
|
|
|
|
|
|
l
|
|
TELUS Corporation Notes
|
|
|
|
|
|
|
|
|
U.S.$: 8.0% due June
2011(1)
|
|
|
2,053
|
|
|
|
l
|
|
Series CB: 5.0% due June 2013
|
|
|
299
|
|
|
|
299
|
|
Series CC: 4.5% due March 2012
|
|
|
299
|
|
|
|
299
|
|
Series CD: 4.95% due March 2017
|
|
|
689
|
|
|
|
689
|
|
Series CE: 5.95% due April 2015
|
|
|
497
|
|
|
|
497
|
|
Series CF: 4.95% due May 2014
|
|
|
697
|
|
|
|
697
|
|
TELUS Corporation Commercial Paper
|
|
|
534
|
|
|
|
534
|
|
TELUS Corporation Credit Facilities
|
|
|
|
|
|
|
|
|
TELUS Communications Inc. Debentures
|
|
|
|
|
|
|
|
|
Series 1: 12.0% due May 2010
|
|
|
50
|
|
|
|
50
|
|
Series 2: 11.90% due November 2015
|
|
|
124
|
|
|
|
124
|
|
Series 3: 10.65% due June 2021
|
|
|
173
|
|
|
|
173
|
|
Series 5: 9.65% due April 2022
|
|
|
245
|
|
|
|
245
|
|
Series B: 8.80% due September 2025
|
|
|
198
|
|
|
|
198
|
|
TELUS Communications Inc. First Mortgage Bonds
|
|
|
|
|
|
|
|
|
Series U: 11.5% due July 2010
|
|
|
30
|
|
|
|
30
|
|
Capital leases and other long-term debt
|
|
|
3
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
Total long-term debt
|
|
|
5,891
|
|
|
|
l
|
|
|
|
|
|
|
|
|
|
|
Total debt
|
|
|
5,891
|
|
|
|
l
|
|
|
|
|
|
|
|
|
|
|
Shareholders equity
|
|
|
|
|
|
|
|
|
Common Shares and Non-Voting Shares
|
|
|
5,286
|
|
|
|
5,286
|
|
Retained earnings
|
|
|
2,154
|
|
|
|
2,154
|
|
Accumulated other comprehensive income (loss)
|
|
|
(105
|
)
|
|
|
(105
|
)
|
Contributed surplus
|
|
|
178
|
|
|
|
178
|
|
Non-controlling interests
|
|
|
20
|
|
|
|
20
|
|
|
|
|
|
|
|
|
|
|
Total shareholders equity
|
|
|
7,533
|
|
|
|
7,533
|
|
|
|
|
|
|
|
|
|
|
Total capitalization
|
|
$
|
13,390
|
|
|
$
|
l
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The principal amount outstanding of
the notes is U.S.$1.945 billion of which
U.S.$20 million are owned indirectly by the Company. See
Use of Proceeds.
|
S-13
USE OF
PROCEEDS
The total net proceeds to be received by the Company from this
Offering are estimated to be approximately
$ l after
payment of fees to the Agents but before deduction of the
expenses of this Offering. The net proceeds of the sale of the
Notes offered hereby will be used to fund the redemption
on l of
U.S.$ l
million principal amount of the Companys outstanding
U.S.$1.945 billion 8% Notes due June 1, 2011, for
payments required to terminate cross-currency interest rate
swaps associated with the notes to be redeemed and any excess
for general corporate purposes, including increasing working
capital (and, pending any such use, investing in bank deposits
and short-term marketable securities). The estimated redemption
price for the notes to be redeemed (net of the
U.S.$ l
million principal amount of the notes to be redeemed owned
indirectly by the Company), excluding accrued interest, is
approximately
U.S.$ l
million and the estimated payment required to terminate the
associated swaps is approximately
$ l .
EARNINGS
COVERAGE RATIO
For the 12-month periods ended December 31, 2008 and
September 30, 2009, the Companys consolidated
earnings before income taxes and gross interest expense was
$2,035 million and $1,941 million, respectively. Gross
interest expense for each of these 12-month periods, after
giving effect to this Offering and to the redemption of U.S.
$l million
principal amount of the Companys outstanding U.S.$1.945
billion 8% Notes due June 1, 2011 as though they had occurred at
the beginning of each such period, would be
$l million
and
$l million,
respectively. The earnings coverage ratio refers to the ratio of
(i) consolidated earnings before income taxes and gross
interest expense, and (ii) gross interest expense. The
following earnings coverage ratios, after giving effect to this
Offering and to the redemption of
U.S.$l
million principal amount of the Companys outstanding
U.S.$1.945 billion 8% Notes due June 1, 2011 as though
they had occurred at the beginning of each such period, were
calculated on a consolidated basis for the 12-month periods
ended December 31, 2008 and September 30, 2009:
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
September 30,
|
|
|
2008
|
|
2009
|
|
Earnings coverage ratio on long-term debt obligations
|
|
|
l times
|
|
|
|
l times
|
|
The earnings coverage ratio set out above does not purport to be
indicative of an earnings coverage ratio for any future periods.
RISK
FACTORS
An investment in the Notes offered hereby involves certain
risks. In addition to the other information contained in this
prospectus supplement and in the section entitled Risks
and risk management in Managements Discussion and
Analysis of financial results for the year ended
December 31, 2008 and in Managements Discussion and
Analysis of financial results in respect of the Companys
unaudited interim financial statements filed thereafter, each of
which sections is being incorporated herein by reference,
prospective investors should carefully consider the following
factors in evaluating TELUS and its business before making an
investment in the Notes.
Structural
Subordination of Notes
The Notes will be obligations exclusively of the Company. The
Companys existing operations are currently conducted
through its subsidiaries. Its ability to meet its debt service
obligations, including payment of principal and interest on the
Notes, is dependent upon the cash flow of its subsidiaries and
the payment of funds by its subsidiaries to the Company in the
form of loans, dividends, fees or otherwise. The Companys
subsidiaries are separate and distinct legal entities and will
have no obligation, contingent or otherwise, to pay any amounts
due pursuant to the Notes or to make any funds available
therefor, whether in the form of loans, dividends or otherwise.
Because the Companys subsidiaries will not guarantee the
payment of principal of or interest on the Notes, any right of
the Company to receive assets of the subsidiaries upon their
bankruptcy, liquidation or reorganization (and the consequent
right of the holders of the Notes to participate in the
distribution of proceeds from those assets) will be effectively
subordinated to the claims of such subsidiaries creditors
(including tax authorities, trade creditors and lenders).
Bankruptcy
and Related Laws
The Company is incorporated under the laws of the Province of
British Columbia and its principal operating assets are located
in Canada.
The rights of the Trustee (as defined herein) to enforce
remedies are likely to be significantly impaired by the
restructuring and other provisions of applicable Canadian
bankruptcy, insolvency, restructuring and other similar
S-14
legislation if the benefit of such legislation is sought with
respect to the Company. For example, both the Bankruptcy and
Insolvency Act (Canada) and the Companies Creditors
Arrangement Act (Canada) contain provisions enabling
an insolvent person to obtain a stay of proceedings
as against its creditors and others and to prepare and file a
proposal for consideration by all or some of its creditors to be
voted on by the various classes of its creditors. Such a
restructuring proposal, if accepted by the requisite majorities
of creditors and if approved by the court, would be binding on
persons who might not otherwise be willing to accept it.
Moreover, both statutes permit, in certain circumstances, the
insolvent debtor to retain possession and administration of its
property, even though it may be in default under the applicable
debt instrument.
The powers of the court under applicable Canadian bankruptcy,
insolvency, restructuring and other similar legislation
(including the Bankruptcy and Insolvency Act (Canada) and
particularly under the Companies Creditors Arrangement
Act (Canada)) have been exercised broadly to protect a
debtor entity from actions taken by creditors and other parties.
Accordingly, it is impossible to predict if payments under the
Notes would be made following commencement of or during such a
proceeding, whether or when the Trustee could exercise its
rights under the Indenture or whether and to what extent holders
of the Notes would be compensated for any delay, in payments of
principal and interest.
No Public
Market
There is no established trading market for the Notes. The
Company does not intend to have the Notes listed for trading on
any securities exchange or quoted on any automated dealer
quotation system. The Agents have advised the Company that they
presently intend to make a market in the Notes, but the Agents
are not obligated to do so and any such market-making may be
discontinued at any time at the sole discretion of the Agents.
Accordingly, no assurance can be given as to the prices or
liquidity of, or trading markets for, the Notes. The liquidity
of any market for the Notes will depend upon the number of
holders of such securities, the interest of securities dealers
in making a market in the securities and other factors. The
absence of an active market for the securities offered hereby
could adversely affect their market price and liquidity.
Credit
Ratings
There can be no assurance that the credit ratings assigned to
the Notes will remain in effect for any given period of time or
that the ratings will not be withdrawn or revised at any time.
Real or anticipated changes in credit ratings on the Notes may
affect the market value of the Notes. In addition, real or
anticipated changes in credit ratings can affect the cost at
which TELUS can access the capital markets. See Credit
Ratings.
Repurchase
upon Change of Control Triggering Event
In the event that the Company is required to offer to repurchase
the Notes upon the occurrence of a Change of Control Triggering
Event, it may not have sufficient funds to repurchase the Notes
in cash at such time. In addition, the Companys ability to
repurchase the Notes for cash may be limited by applicable law.
Interest
Rate Risks
Prevailing interest rates will affect the market price or value
of the Notes. The market price or value of the Notes will
decline as prevailing interest rates for comparable debt
instruments rise, and increase as prevailing interest rates for
comparable debt instruments decline.
DETAILS
OF THE OFFERING
The following description of the Notes is a brief summary of
their material attributes and characteristics, which does not
purport to be complete and is qualified in its entirety by
reference to the Indenture (as defined herein). The following
summary uses words and terms which have been defined in the
Indenture. For full particulars, reference is made to the short
form base shelf prospectus and to the Indenture.
General
The Notes offered hereby will be issued under the trust
indenture dated May 22, 2001 (the Trust
Indenture) between the Company and Montreal Trust Company
of Canada (now Computershare Trust Company of Canada), as
trustee (the Trustee), as supplemented by a ninth
series supplement to be dated the issuance date (the
Supplemental Indenture) between the Company and the
Trustee providing for, among other things, the creation and
issue of the Notes. The Trust Indenture is described in the
short form base shelf prospectus. References herein to the
Indenture refer to the Trust Indenture as
supplemented by the Supplemental Indenture. The Company may,
from time to time, without the consent of existing Noteholders,
create and issue additional Notes under the Supplemental
Indenture, having the same terms and conditions as the Notes in
all respects, except for such variations to such terms and
conditions as may be
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required, in the reasonable opinion of the Company, to reflect
the different issue dates of such additional Notes and the then
existing Notes and any intention that all such additional Notes
and the then existing Notes be fungible for trading purposes.
Additional Notes issued in this manner will be consolidated with
and form a single series with the then existing Notes and, if
the Company acting reasonably determines that it is advisable or
advantageous to do so, the Company may accept such additional
Notes and the then existing Notes in exchange for consolidated
and restated replacement Notes reflecting the terms and
conditions of such additional Notes and the then existing Notes.
Principal,
Maturity and Interest
The Notes will be initially limited to
$ l
aggregate principal amount (provided that the Company may in the
future issue additional Notes up to any additional amount
determined by the Company without the consent of existing
holders), and will mature on December 4, 2019. The Notes
will bear interest at the rate
of l %
per annum from their issuance date, payable in equal semi-annual
instalments on June 4 and December 4 of each year to
holders of record on May 15 and November 15,
respectively. The first interest payment on the Notes will be
due on June 4, 2010 and will represent accrued interest
from, and including, December 4, 2009 to, but excluding,
June 4, 2010 and will be in the amount
of $ l .
Principal and interest on the Notes will be payable in lawful
money of Canada.
The issuance date for the Notes will be December 4, 2009.
On maturity, the Company will repay the indebtedness represented
by the Notes by paying the Trustee in lawful money of Canada an
amount equal to the principal amount of the outstanding Notes
plus any accrued and unpaid interest thereon. Interest will be
computed on the basis of a
365-day
calendar year. The yearly rate of interest that is equivalent to
the rate payable under the Notes is the rate payable multiplied
by the actual number of days in the year and divided by 365 and
is disclosed herein solely for the purpose of providing the
disclosure required by the Interest Act (Canada).
The Notes will be issued only in fully registered form, without
coupons, in denominations of $1,000 of principal amount and any
integral multiple thereof.
Optional
Redemption
The Notes may be redeemed at any time at the option of the
Company, in whole or from time to time, in part, on not fewer
than 30 nor more than 60 days prior notice at a
redemption price equal to the greater of (a) the Discounted
Value of the Notes, or (b) 100 % of the principal amount
thereof. In addition, accrued and unpaid interest, if any, will
be paid to the date fixed for redemption.
In the case of a redemption for less than all of the Notes, the
Notes to be redeemed will be selected by the Trustee in such
manner as the Trustee deems appropriate.
Discounted Value shall mean an amount equal to the
sum of the present values of all remaining scheduled payments of
principal and interest (not including any portion of the payment
of interest accrued as of the redemption date) from the
redemption date of the Notes to the respective due dates for
such payments until maturity of the Notes computed on a
semi-annual basis by discounting such payments (assuming a
365 day year) to the redemption date of the Notes at the
Government of Canada Yield
plus l basis
points.
Government of Canada Yield shall mean, with respect
to any redemption date, the mid market yield to maturity on the
third business day (the Determination Date)
preceding the redemption date of the Notes, compounded
semi-annually, which a non-callable Government of Canada Bond
would carry if issued, in Canadian dollars in Canada, at
100 % of its principal amount on such date with a term to
maturity which most closely approximates the remaining term to
maturity of the Notes from such redemption date as quoted by a
dealer selected from time to time by the Company and approved by
the Trustee at noon (Toronto time) on such Determination Date.
Tax
Redemption
The Notes will be subject to redemption in whole, but not in
part, at the option of TELUS at any time, on not fewer than 30
nor more than 60 days prior written notice, at
100 % of the principal amount, together with accrued and
unpaid interest thereon to the redemption date, in the event
TELUS delivers to the Trustee an opinion of independent Canadian
tax counsel experienced in such matters to the effect that TELUS
has become or would become obligated to pay, on the next date on
which any amount would be payable with respect to the
outstanding Notes any Additional Amounts (as defined herein) as
a result of a change in the laws (including any regulations
promulgated thereunder) of Canada, or any province or territory
thereof or therein or any agency thereof or therein having the
power to tax, or any change in any official position regarding
the application or interpretation of such laws or regulations,
which change is announced or
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becomes effective on or after the date of the original issuance
of the Notes; provided that TELUS determines, in its business
judgment, that the obligation to pay such Additional Amounts
cannot be avoided by the use of reasonable measures available to
TELUS (not including substitution of the obligor under the
Notes).
Repurchase
upon Change of Control Triggering Event
If a Change of Control Triggering Event (as defined below)
occurs, unless the Company has exercised its optional right to
redeem all of the Notes as described under Optional
Redemption or Tax Redemption above, the
Company will be required to make an offer to repurchase all or,
at the option of the Noteholder, any part (equal to $1,000 or an
integral multiple thereof) of each Noteholders Notes
pursuant to the offer described below (the Change of
Control Offer) on the terms set forth in the Supplemental
Indenture. In the Change of Control Offer, the Company will be
required to offer payment in cash equal to 101% of the aggregate
principal amount of Notes together with accrued and unpaid
interest on the Notes repurchased to the date of purchase.
Within 30 days following any Change of Control Triggering
Event, the Company will be required to give written notice to
Noteholders describing the transaction or transactions that
constitute the Change of Control Triggering Event and offering
to repurchase the Notes on the date specified in the notice,
which date will be no earlier than 30 days and no later
than 60 days from the date such notice is given (the
Change of Control Payment Date). The Company must
comply with the requirements of applicable securities laws and
regulations in connection with the repurchase of the Notes as a
result of a Change of Control Triggering Event. To the extent
that the provisions of any such applicable securities laws and
regulations conflict with the Change of Control (as defined
below) provisions, the Company will be required to comply with
such laws and regulations and will not be deemed to have
breached its obligations to repurchase the Notes by virtue of
such conflict.
The Company will not be required to make a Change of Control
Offer upon a Change of Control Triggering Event if a third party
makes such an offer substantially in the manner, at the times
and in compliance with the requirements for a Change of Control
Offer (and for at least the same purchase price payable in cash)
and such third party purchases all Notes properly tendered and
not withdrawn under its offer.
Change of Control shall mean the occurrence of any
one of the following: (a) the direct or indirect sale,
transfer, conveyance, lease or other disposition (other than by
way of consolidation, amalgamation or merger), in one or a
series of related transactions, of all or substantially all of
the property and assets of the Company and its subsidiaries,
taken as a whole, to any person or group of persons acting
jointly or in concert for purposes of such transaction (other
than to the Company and its subsidiaries); or (b) the
consummation of any transaction including, without limitation,
any consolidation, amalgamation, merger or issue of voting
shares the result of which is that any person or group of
persons acting jointly or in concert for purposes of such
transaction (other than the Company and its subsidiaries)
becomes the beneficial owner, directly or indirectly, of more
than 50% of the voting shares of the Company, measured by voting
power rather than number of shares (but shall not include the
creation of a holding company or similar transaction that does
not involve a change in the beneficial ownership of the Company).
Change of Control Triggering Event shall mean the
occurrence of both a Change of Control and a Rating Event.
Investment Grade Rating shall mean a rating equal to
or higher than Baa3 (or the equivalent) by Moodys,
BBB− (or the equivalent) by S&P or BBB (low) (or the
equivalent) by DBRS, or the equivalent investment grade credit
rating from any other Specified Rating Agency.
Rating Event shall mean the rating on the Notes is
lowered to below an Investment Grade Rating by at least two out
of three of the Specified Rating Agencies if there are three
Specified Rating Agencies or all of the Specified Rating
Agencies if there are less than three Specified Rating Agencies
(the Required Threshold) on any day within the
60-day
period (which
60-day
period will be extended so long as the rating of the Notes is
under publicly announced consideration for a possible downgrade
by such number of the Specified Rating Agencies which, together
with Specified Rating Agencies which have already lowered their
ratings on the Notes as aforesaid, would aggregate in number the
Required Threshold, but only to the extent that, and for so long
as, a Change of Control Triggering Event would result if such
downgrade were to occur) after the earlier of (a) the
occurrence of a Change of Control and (b) public notice of
the occurrence of a Change of Control or of the Companys
intention or agreement to effect a Change of Control.
Specified Rating Agencies shall mean each of
Moodys, S&P and DBRS as long as, in each case, it has
not ceased to rate the Notes or failed to make a rating of the
Notes publicly available for reasons outside of the
Companys control; provided that if one or more of
Moodys, S&P or DBRS ceases to rate the Notes or fails
to make a rating of the Notes publicly available for reasons
outside of the Companys control, the Company may select
any other approved rating
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organization within the meaning of National
Instrument 41-101
of the Canadian Securities Administrators as a replacement
agency for such one or more of them, as the case may be.
Purchase
of Notes
The Company may, at any time and from time to time, purchase
Notes in the market (which may include purchases from or through
an investment dealer or a firm holding membership on a
recognized stock exchange) or by tender or private contract, at
any price, subject to applicable law.
Defeasance
The provisions described under Description of Debt
Securities Defeasance in the short form base
shelf prospectus are applicable to the Notes, including the
condition that the Company will deliver to the Trustee an
opinion of counsel to the effect that the holders of Notes will
not recognize income, gain or loss for Canadian or United States
federal income tax purposes as a result of such defeasance and
will be subject to Canadian and United States federal income tax
on the same basis as if such defeasance had not occurred.
Events of
Default
Events of Default are described in the short form base shelf
prospectus and reference is made to that document for a list of
the events which constitute an Event of Default with respect to
the Notes.
Negative
Pledge
The Indenture contains provisions to the effect that the Company
will not, nor will it permit any Restricted Subsidiary (as
defined below) to create or assume any Lien (as defined in the
short form base shelf prospectus) upon any present or future
Principal Property (as defined in the short form base shelf
prospectus), or any Property (as defined in the short form base
shelf prospectus) which, together with any other Property
subject to Liens in the same transaction or a series of related
transactions, would in the aggregate constitute a Principal
Property, of the Company or any Restricted Subsidiary, to secure
Indebtedness (as defined in the short form base shelf
prospectus) of the Company or a Restricted Subsidiary unless the
Notes (together with, if the Company shall so determine, any
other Indebtedness of the Company or any Restricted Subsidiary
ranking equally with the Notes then existing or thereafter
created), shall be concurrently secured equally and rateably
with (or prior to) such other Indebtedness so long as such Lien
is outstanding.
The restrictions set forth above shall not apply to certain
permitted Liens, including:
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(i)
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Liens existing on the issuance date for the Notes (namely
December 4, 2009);
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(ii)
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Liens on any Property of any Person existing at the time such
Person becomes a Restricted Subsidiary, or at the time such
Person amalgamates or merges with the Company or a Restricted
Subsidiary, which Liens are not created in contemplation of such
Person becoming a Restricted Subsidiary or effecting such
amalgamation or merger;
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(iii)
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Liens on any Property existing at the time such Property is
acquired by the Company or a Restricted Subsidiary, or Liens to
secure the payment of all or any part of the purchase price of
such Property upon the acquisition of such Property by the
Company or a Restricted Subsidiary or to secure any Indebtedness
incurred prior to, at the time of, or within 270 days
after, the later of the date of acquisition of such Property and
the date such Property is placed in service, for the purpose of
financing all or any part of the purchase price thereof, or
Liens to secure any Indebtedness incurred for the purpose of
financing the cost to the Company or a Restricted Subsidiary of
improvements to such acquired Property or to secure any
indebtedness incurred for the purpose of financing all or
any part of the purchase price or the cost of construction of
the Property subject to such Liens;
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(iv)
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Liens securing any Indebtedness of a Restricted Subsidiary owing
to the Company or to another Restricted Subsidiary;
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(v)
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Liens on Property of the Company or a Restricted Subsidiary
securing indebtedness or other obligations issued by Canada
or the United States of America or any state or any department,
agency or instrumentality or political subdivision of Canada or
the United States of America or any state, or by any other
country or any political subdivision of any other country,
for the purpose of financing all or any part of the purchase
price of, or, in the case of real property, the cost of
construction on or improvement of, any property or assets
subject to the Liens, including Liens incurred in
connection with pollution control, industrial revenue or
similar financings;
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(vi)
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Liens securing any extension, renewal or replacement (or
successive extensions, renewals or replacements) in whole or in
part of any Indebtedness secured by any permitted Lien,
including those referred to in the foregoing clauses (i),
(ii), (iii), (iv) and (v); provided, however, that
such new Lien is limited to the Property which was subject to
the prior Lien immediately before such extension, renewal or
replacement, and provided, further, that the principal amount of
Indebtedness secured by the prior Lien immediately prior to such
extension, renewal or replacement is not increased; and
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(vii)
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any other Liens not otherwise qualifying as a permitted Lien
provided that, at the applicable time, the sum of (without
duplication) (x) the aggregate principal amount of the
Indebtedness secured by all such other Liens, plus (y) the
Attributable Debt (as defined in the short form base shelf
prospectus) determined at such time of the then outstanding
Unrestricted Sale and Lease-Back Transactions (as defined under
Limitation on Sale and Lease-Back Transactions
below) to which the Company or a Restricted Subsidiary is a
party, plus (z) the then outstanding principal amount of
all other Indebtedness of Restricted Subsidiaries incurred in
compliance with Limitation on Restricted Subsidiary
Indebtedness below (other than any Indebtedness of
Restricted Subsidiaries excluded from the calculations of such
limitation on Restricted Subsidiary Indebtedness pursuant to the
provisos contained therein), does not exceed 15% of the then
applicable Consolidated Net Tangible Assets.
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Restricted Subsidiary means (a) TELUS
Communications Inc., (b) TELUS Communications Company, and
(c) at any time any other Subsidiary (as defined in the
short form base shelf prospectus) of the Company if, at the end
of the most recent fiscal quarter for which the Company has
issued its financial statements, the total assets of such
Subsidiary exceeds 10% of the consolidated assets of the Company
and its Subsidiaries, determined in accordance with Canadian
generally accepted accounting principles consistently applied.
Limitation
on Restricted Subsidiary Indebtedness
The Indenture contains provisions to the effect that TELUS shall
not permit any Restricted Subsidiary to, directly or indirectly,
create, incur or assume any Indebtedness, unless after giving
effect to the incurrence of such Indebtedness and the
application of the proceeds therefrom, the sum of (without
duplication) (x) the aggregate principal amount of
Indebtedness of all Restricted Subsidiaries, plus (y) the
then outstanding principal amount of Indebtedness of TELUS
secured by Liens (other than any Lien constituting a Permitted
Lien under any of clauses (a) to (cc) inclusive of the
definition of Permitted Liens), plus (z) Attributable Debt
relating to then outstanding Unrestricted Sale and Lease-Back
Transactions of TELUS, would not exceed 15% of Consolidated Net
Tangible Assets. This restriction does not affect the Permitted
Indebtedness (as defined in the Supplemental Indenture in
respect of the Notes) of Restricted Subsidiaries, which is
(1) Indebtedness secured by any Lien constituting a
Permitted Lien under any of clauses (a) to
(cc) inclusive of the definition of Permitted Liens,
(2) Indebtedness (excluding Indebtedness outstanding under
commercial paper programs) of any Person existing on the date of
the Supplemental Indenture or at the time such Person becomes a
Restricted Subsidiary, (3) Indebtedness owing to TELUS or
to another Restricted Subsidiary, (4) commercial paper
issued by the Restricted Subsidiaries not to exceed in the
aggregate $1 billion, and (5) any extension, renewal
or replacement (including successive extensions, renewals or
replacements), in whole or in part, of any Indebtedness of the
Restricted Subsidiaries referred to in any of the preceding
clauses (1), (2), (3) or (4) (provided that the
principal amount of such Indebtedness immediately prior to such
extension, renewal or replacement is not increased).
Limitation
on Sale and Lease-Back Transactions
Neither the Company nor any Restricted Subsidiary may enter into
any Sale and Lease-Back Transaction, except for:
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(i)
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any Sale and Lease-Back Transaction constituting a specified
permitted Lien under the Indenture; or
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(ii)
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any Sale and Lease-Back Transaction that is not otherwise
permitted under clauses (i) above or (iii) below and
in respect of which the Company or such Restricted Subsidiary
would, at the time it enters into such Sale and Lease-Back
Transaction, be entitled to create a Lien on the Principal
Property (or the properties, as the case may be) subject to such
Sale and Lease-Back Transaction to secure Indebtedness at least
equal in amount to the Attributable Debt in respect of such Sale
and Lease-Back Transaction without being required to equally and
rateably secure the Notes pursuant to the negative pledge
described above (any Sale and Lease-Back Transaction entered
into in compliance with this paragraph being an
Unrestricted Sale and Lease-Back Transaction); or
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(iii)
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any Sale and Lease-Back Transaction if the Company or such
Restricted Subsidiary shall apply or cause to be applied, in the
case of a sale or transfer for cash, an amount equal to the
greater of the fair market value of the Principal Property (or
the properties, as the case may be) sold or transferred and
leased back pursuant to such
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S-19
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Sale and Lease-Back Transaction or the net proceeds of such Sale
and Lease-Back Transaction and, in the case of a sale or
transfer otherwise than for cash, an amount equal to the fair
market value of the Principal Property (or the properties, as
the case may be) sold or transferred and leased back pursuant to
such Sale and Lease-Back Transaction, to (x) the retirement
(other than any mandatory retirement), within 180 days
after the effective date of such Sale and Lease-Back
Transaction, of Indebtedness of the Company (which may but need
not include the Debt Securities (as defined in the short form
base shelf prospectus) of any series ranking on a parity with,
or prior to, the Notes and owing to a Person other than the
Company or any Affiliate of the Company, or (y) the
purchase, construction or improvement of real property or
personal property used by the Company or the Restricted
Subsidiaries in the ordinary course of business.
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Other
Covenants
In addition to the covenants of the Company described above
under Limitation on Restricted Subsidiary
Indebtedness, under Negative Pledge, which
supersedes the provisions described under Description of
Debt Securities Negative Pledge in the
accompanying short form base shelf prospectus, and under
Limitation on Sale and Lease-Back Transactions which
supersedes the provisions described under Description of
Debt Securities Limitation on Sale and Lease-Back
Transactions in the accompanying short form base shelf
prospectus, there are certain additional covenants which are
applicable to the Notes that are described in the short form
base shelf prospectus and reference is made to that document for
descriptions of such covenants.
Book-Entry
System
The Notes will be issued in the form of one or more fully
registered global securities (the Global Notes) to
be held by, or on behalf of, CDS Clearing and Depository
Services Inc. (CDS), as depositary and registered in
the name of CDSs nominee. Direct and indirect participants
in CDS, including The Depositary Trust Company
(DTC), Euroclear Bank S.A./N.V., as operator of the
Euroclear System (Euroclear) and Clearstream
Banking, société anonyme (Clearstream,
Luxembourg), on behalf of their respective accountholders,
will record beneficial ownership of the Notes on behalf of their
respective accountholders.
DTC,
Euroclear and Clearstream, Luxembourg
Noteholders may hold their Notes through the accounts maintained
by DTC, Euroclear or Clearstream, Luxembourg in CDS only if they
are participants of those systems, or indirectly through
organizations which are participants of those systems.
DTC, Euroclear and Clearstream, Luxembourg will hold omnibus
book-entry positions on behalf of their participants through
customers securities accounts in their respective
depositaries which in turn will hold such positions in
customers securities accounts in the names of the nominees
of the depositaries on the books of CDS. All securities in DTC,
Euroclear or Clearstream, Luxembourg are held on a fungible
basis without attribution of specific certificates to specific
securities clearance accounts.
Transfers of Notes by persons holding through Euroclear or
Clearstream, Luxembourg participants will be effected through
CDS, in accordance with CDS rules, on behalf of the relevant
European international clearing system by its depositaries;
however, such transactions will require delivery of transfer
instructions to the relevant European international clearing
system by the participant in such system in accordance with its
rules and procedures and within its established deadlines
(European time). The relevant European international clearing
system will, if the transfer meets its requirements, deliver
instructions to its depositaries to take action to effect
transfer of the Notes on its behalf by delivering Notes through
CDS and receiving payment in accordance with its normal
procedures for next-day funds settlement. Payments with respect
to the Notes held through Euroclear or Clearstream, Luxembourg
will be credited to the cash accounts of Euroclear participants
or Clearstream, Luxembourg participants in accordance with the
relevant systems rules and procedures, to the extent
received by its depositaries.
Although the Company will make all payments of principal and
interest on the Notes in Canadian dollars, holders of Notes held
through DTC will receive such payments in U.S. dollars, except
as set forth below. Canadian dollar payments received by CDS
will be exchanged into U.S. dollars and paid directly to DTC in
accordance with procedures established from time to time by CDS
and DTC. All costs of conversion will be borne by holders of
Notes held through DTC who receive payments in U.S. dollars.
Holders of Notes held through DTC may elect, through procedures
established from
S-20
time to time by DTC and its participants, to receive Canadian
dollar payments, in which case such Canadian dollar amounts will
be transferred directly to Canadian dollar accounts designated
by such holders to DTC.
All information in this prospectus supplement on DTC, Euroclear
or Clearstream, Luxembourg reflects the Companys
understanding of the policies of such organizations which may
change at any time without notice.
Payments
Payments of interest and principal on each Global Note will be
made to CDS or its nominee, as the case may be, as registered
holder of the Global Note. As long as CDS or its nominee is the
registered owner of a Global Note, CDS or its nominee, as the
case may be, will be considered the sole legal owner of the
Global Note for the purposes of receiving payments of interest
and principal on the Notes and for all other purposes under the
Indenture and the Notes. Interest payments on Global Notes will
be made by electronic funds transfer on the day interest is
payable and delivered to CDS or its nominee, as the case may be.
The Company understands that CDS or its nominee, upon receipt of
any payment of interest or principal in respect of a Global
Note, will credit participants accounts, on the date
interest or principal is payable, with payments in amounts
proportionate to their respective beneficial interest in the
principal amount of such Global Note as shown on the records of
CDS or its nominee. The Company also understands that payments
of interest and principal by participants to the owners of
beneficial interest in such Global Note held through such
participants will be governed by standing instructions and
customary practices and will be the responsibility of such
participants. The responsibility and liability of the Company in
respect of payments on Notes represented by Global Notes is
limited solely and exclusively, while the Notes are registered
in Global Note form, to making payment of any interest and
principal due on such Global Note to CDS or its nominee.
If definitive Notes are issued instead of or in place of Global
Notes, payments of interest on each definitive Note will be made
by electronic funds transfer, if agreed to by the holder, or by
cheque dated the relevant Interest Payment Date and mailed to
the address of the holder appearing in the register maintained
by the registrar for the Notes, at the close of business on the
last day of the month immediately preceding the month in which
the relevant Interest Payment Date occurs.
The Trustee will act, pursuant to the Indenture, as the
registrar and paying agent. Payment of principal at maturity
will be made at the principal office of the Trustee in the City
of Calgary, Alberta (or in such other city or cities as may from
time to time be designated by the Company) against surrender of
the Notes. If the due date for payment of any amount of
principal or interest on any Note is not, at the place of
payment, a business day (being a day other than a Saturday,
Sunday or a day on which financial institutions at the place of
payment are authorized or obligated by law or regulation to
close) such payment will be made on the next business day and
the holder shall not be entitled to any further interest or
other payment in respect of such delay.
Additional
Amounts
All payments made by TELUS under or with respect to the Notes
will be made free and clear of and without withholding or
deduction for or on account of any present or future tax, duty,
levy, impost, assessment or other governmental charge imposed or
levied by or on behalf of the Government of Canada or of any
province or territory thereof or therein or by any authority or
agency thereof or therein having power to tax (hereinafter
Taxes) unless TELUS is required to withhold or
deduct Taxes by law or by the interpretation or administration
thereof by the relevant government authority or agency. If TELUS
is so required to withhold or deduct any amount for or on
account of Taxes from any payment made under or with respect to
the Notes, TELUS will pay such additional amounts
(Additional Amounts) as may be necessary so that the
net amount received by each holder or beneficial owner
(including Additional Amounts) after such withholding or
deduction will not be less than the amount the holder or
beneficial owner would have received if such Taxes had not been
withheld or deducted; provided that no Additional Amounts will
be payable with respect to:
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any payment to a holder or beneficial owner who is liable for
such Taxes in respect of such Note (1) by reason of such
holder or beneficial owner being a person with whom TELUS is not
dealing at arms length for the purposes of the Income
Tax Act (Canada) or (2) by reason of the existence of
any present or former connection between such holder or
beneficial owner (or between a fiduciary, settlor, beneficiary,
member or shareholder of, or possessor of power over, such
holder or beneficial owner, if such holder or beneficial owner
is an estate, trust, partnership, limited liability company or
corporation) and Canada or any province or territory thereof or
therein or agency thereof or therein other than the mere
holding, use or ownership or deemed holding, use or ownership,
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or receiving payments or enforcing any rights in respect of such
Note as a non-resident or deemed non-resident of Canada or any
province or territory thereof or therein or agency thereof or
therein; or
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any Note presented for payment more than 30 days after the
later of (1) the date on which such payment first becomes
due or (2) if the full amount of the monies payable has not
been paid to the holders of the Notes on or prior to such date,
the date on which the full amount of such monies has been paid
to the holders of the Notes, except to the extent that the
holder thereof would have been entitled to such Additional
Amounts on presenting the same for payment on the last day of
such period of 30 days; or
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any estate, inheritance, gift, sales, transfer, excise or
personal property tax or any similar Tax; or
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any Tax imposed as a result of the failure of a holder or
beneficial owner of a Note to comply with certification,
identification, declaration or similar reporting requirements
concerning the nationality, residence, identity or connection
with Canada or any province or territory thereof or therein or
agency thereof or therein of the holder or beneficial owner of
such Note, if such compliance is required by statute or by
regulation, as a precondition to reduction of, or exemption,
from such Tax; or
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any Tax that is imposed or withheld solely by reason of a change
in law, regulation, or administrative or judicial interpretation
that becomes effective more than 15 days after payment
becomes due or is duly provided for, whichever occurs
later; or
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any Tax which is payable otherwise than by withholding or
deduction from any payment made under or with respect to the
Notes; or
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any combination of the above items,
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nor will such Additional Amounts be paid with respect to any
payment on any Note to a holder or beneficial owner who is a
fiduciary or partnership or other than the sole beneficial owner
of such Note to the extent that a beneficiary or settlor with
respect to such fiduciary, or a member of such partnership or a
beneficial owner thereof would not have been entitled to receive
a payment of such Additional Amounts had such beneficiary,
settlor, member or beneficial owner received directly its
beneficial or distributive share of such payment.
Whenever in the Indenture or in any Note there is mentioned, in
any context, the payment of principal of, or premium, interest
or any other amount on any Note, such mention shall be deemed to
include mention of the payment of Additional Amounts to the
extent that, in such context, Additional Amounts are, were or
would be payable in respect thereof.
The obligation to pay Additional Amounts will survive any
termination or discharge of the Indenture or the redemption,
repayment or purchase of the Notes.
Governing
Law
Each of the Indenture and the Notes are governed by, and
construed in accordance with, the laws of the Province of
Ontario.
CREDIT
RATINGS
The Notes have been rated BBB+, stable outlook, by
Standard & Poors, a division of McGraw-Hill
Companies (S&P), Baa1, stable outlook, by
Moodys Investors Service (Moodys), BBB+,
stable outlook, by Fitch Ratings (Fitch) and
A (low), stable trend, by DBRS Limited (DBRS)
(each a Rating Agency). Credit ratings are intended
to provide investors with an independent measure of the credit
quality of an issue of securities.
Ratings for debt instruments range from AAA to D from S&P,
which represents the range from highest to lowest quality of
such securities rated. S&P describes debt instruments rated
BBB as exhibiting adequate protection parameters. However,
adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity of the obligor to meet its
financial commitment on the obligation. The addition of a
plus (+) or minus () designation after a rating
indicates the relative standing within a particular rating
category.
Ratings for debt instruments range from Aaa to C from
Moodys, which represents the range from highest to lowest
quality of such securities rated. Moodys describes debt
instruments rated Baa as being subject to moderate credit risk
and as being considered medium-grade and as such may possess
certain speculative characteristics. The addition of a 1, 2 or 3
modifier after a rating indicates the relative standing within a
particular rating category. The modifier 1 indicates that
the
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issue ranks in the higher end of its generic rating category,
the modifier 2 indicates a mid-range ranking and the
modifier 3 indicates that the issue ranks in the lower end
of its generic rating category.
Ratings for debt instruments range from AAA to D from Fitch,
which represents the range from highest to lowest quality of
such securities rated. Fitch describes debt instruments rated
BBB as having good credit quality. According to Fitch, BBB
ratings indicate that there are currently expectations of low
credit risk and that the capacity for payment of financial
commitments is considered adequate but adverse changes in
circumstances and economic conditions are more likely to impair
this capacity. The modifiers + or
may be appended to a rating to denote relative status within
major rating categories.
Ratings for debt instruments range from AAA to D from DBRS,
which represents the range from highest to lowest quality of
such securities rated. DBRS describes debt instruments
rated A is of satisfactory credit quality. Protection of
interest and principal is still substantial, but the degree of
strength is less than that of AA rated entities. While A is a
respectable rating, entities in this category are considered to
be more susceptible to adverse economic conditions and have
greater cyclical tendencies than higher-rated securities. Each
DBRS rating category is denoted by the subcategories
high and low. The absence of either a
high or low designation indicates the
rating is in the middle of the category.
The credit ratings accorded to the Notes by the Rating Agencies
are not recommendations to purchase, hold or sell the Notes
inasmuch as such ratings do not comment as to market price or
suitability for a particular investor. There is no assurance
that any rating will remain in effect for any given period of
time or that any rating will not be withdrawn or revised
entirely by a Rating Agency at any time if in its judgment
circumstances so warrant.
ELIGIBILITY
FOR INVESTMENT
In the opinion of Bennett Jones LLP and Osler, Hoskin &
Harcourt LLP, the Notes, if issued on the date hereof, will be
qualified investments under the Income Tax Act (Canada)
(the Tax Act) and the regulations thereunder (the
Regulations) for trusts governed by registered
retirement savings plans, registered retirement income funds,
registered disability savings plans, registered education
savings plans, deferred profit sharing plans (other than trusts
governed by deferred profit sharing plans for which any of the
employers is the Company or is an employer with whom the Company
does not deal at arms length, within the meaning of the
Tax Act) and tax-free savings accounts. Notes will not be a
prohibited investment for a tax-free savings account
provided the holder deals at arms length with the Company
for the purposes of the Tax Act and does not have a
significant interest (within the meaning of the Tax
Act) in the Company or in a corporation, partnership or trust
with which the Company does not deal at arms length for
purposes of the Tax Act.
CERTAIN
CANADIAN AND UNITED STATES INCOME TAX CONSIDERATIONS
The discussion below is intended to be a general description of
Canadian and United States federal income tax considerations
generally applicable to an investment in the Notes. It does not
take into account the individual circumstances of any particular
investor. Therefore, prospective investors are urged to consult
their own tax advisors with respect to the tax consequences of
an investment in the Notes.
Certain
Canadian Federal Income Tax Considerations
In the opinion of Bennett Jones LLP and Osler, Hoskin &
Harcourt LLP, the following is a general summary of the
principal Canadian federal income tax considerations generally
applicable under the Tax Act to a beneficial owner of Notes
acquired hereunder who, at all relevant times, for the purposes
of the Tax Act, holds such Notes as capital property, deals at
arms length with the Company and is not affiliated with
the Company (a Holder). Notes held by
financial institutions (as defined in
section 142.2 of the Tax Act) will generally not be capital
property to such holders and will generally be subject to
special rules contained in the Tax Act. This summary does not
take into account these special rules and holders to whom these
rules may be relevant should consult their own tax advisors.
This summary is based on the current provisions of the Tax Act,
the regulations thereunder (the Regulations) and
counsels understanding of the current administrative
policies and assessing practices of the Canada Revenue Agency
(the CRA) publicly available prior to the date
hereof. This summary also takes into account all specific
proposals to amend the Tax Act and Regulations publicly
announced by or on behalf of the Minister of Finance (Canada)
prior to the date hereof (collectively, the Proposed Tax
Amendments). No assurances can be given that the Proposed
Tax Amendments will be enacted or will be enacted as proposed.
Other than the Proposed Tax Amendments, this summary does not
take into account or anticipate any changes in law or the
administrative policies or assessing practices of the CRA,
whether by
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judicial, legislative, governmental or administrative decision
or action, nor does it take into account provincial, territorial
or foreign income tax legislation or considerations, which may
differ significantly from those discussed herein.
This summary is of a general nature only and is not intended
to be, nor should it be construed to be, legal or tax advice to
any particular holder and no representations with respect to the
income tax consequences to any particular holder are made. This
summary is not exhaustive of all Canadian federal income tax
considerations. Accordingly, prospective investors in Notes
should consult their own tax advisors with respect to their own
particular circumstances.
Generally, for purposes of the Tax Act, all amounts relating to
the acquisition, holding or disposition of Notes or to interest
payable on the Notes must, to the extent such amounts are
otherwise determined or paid in a currency other than Canadian
dollars, be converted into Canadian dollars based on exchange
rates as determined in accordance with the Tax Act. The amount
of interest required to be included in the income of, and
capital gains or capital losses realized by, a Holder may be
affected by fluctuations in the Canadian/U.S. dollar
exchange rate.
Residents
of Canada
The following portion of the summary is generally applicable to
a Holder who, at all relevant times, for the purposes of the Tax
Act, is or is deemed to be resident in Canada (a Resident
Holder). Generally, the Notes will be capital property to
a Resident Holder provided the Resident Holder does not acquire
or hold the Notes in the course of carrying on a business or as
part of an adventure or concern in the nature of trade. Certain
Resident Holders whose Notes might not otherwise qualify as
capital property may be entitled to obtain such qualification in
certain circumstances by making the irrevocable election
permitted by subsection 39(4) of the Tax Act to deem the
Notes and every other Canadian security, as defined
in the Tax Act, owned by such Resident Holder in the taxation
year in which the election is made, and in all subsequent
taxation years, to be capital property. This summary is not
applicable to a holder an interest in which is a tax
shelter investment or a holder to whom the
functional currency reporting rules apply, each as
defined in the Tax Act. Such holders should consult their own
tax advisors.
Taxation
of Interest on the Notes
A Resident Holder that is a corporation, partnership, unit trust
or trust of which a corporation or partnership is a beneficiary
will be required to include in computing its income for a
taxation year any interest on a Note that accrues or is deemed
to accrue to the Resident Holder to the end of that taxation
year, or becomes receivable or is received by the Resident
Holder before the end of that taxation year, to the extent that
such amount was not otherwise included in the Resident
Holders income for a preceding taxation year.
Any other Resident Holder, including an individual, will be
required to include in computing its income for a taxation year
any interest on a Note that is received or receivable by such
Resident Holder in that year (depending upon the method
regularly followed by the Resident Holder in computing income),
to the extent that such amount was not otherwise included in the
Resident Holders income for a preceding taxation year.
A Resident Holder that is a Canadian-controlled private
corporation (as defined in the Tax Act) may be liable for
a refundable tax on investment income. For this purpose,
investment income will generally include interest income.
On a disposition or deemed disposition of a Note, including a
redemption, a payment on maturity, or a purchase for
cancellation, a Resident Holder will generally be required to
include in computing its income for the taxation year in which
the disposition occurs the amount of interest accrued on the
Note from the date of the last interest payment to the date of
disposition to the extent that such amount has not otherwise
been included in the Resident Holders income for the
taxation year or a preceding taxation year.
In addition, any premium paid by the Company to a Resident
Holder as a result of the Companys exercise of its
optional redemption right will generally be deemed to be
interest received by a Resident Holder at the time of the
redemption and will be required to be included in computing the
Resident Holders income as described above to the extent
that the premium can reasonably be considered to relate to, and
does not exceed the value at the time of the redemption of, the
interest that would have been paid or payable by the Company on
the Note for a taxation year ending after the redemption.
Disposition
of Notes
In general, on a disposition or deemed disposition, including a
redemption, payment on maturity or purchase for cancellation, a
Resident Holder will realize a capital gain (or capital loss) to
the extent that the proceeds of disposition, net
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of any accrued interest and any amounts included in the Resident
Holders income on such disposition or deemed disposition
as interest, exceed (or are less than) the adjusted cost base of
the Note to the Resident Holder immediately before the
disposition or deemed disposition and any reasonable costs of
disposition.
Generally, one half of the amount of any capital gain (a
taxable capital gain) realized by a Resident Holder
in a taxation year must be included in the Resident
Holders income in that year, and, subject to and in
accordance with the provisions of the Tax Act, one half of the
amount of any capital loss (an allowable capital
loss) realized by a Resident Holder in a taxation year
must be deducted from taxable capital gains realized by the
Resident Holder in that year. Allowable capital losses in excess
of taxable capitals gains in any particular year may be carried
back and deducted in any of the three preceding taxation years
or carried forward and deducted in any subsequent taxation year
against net taxable capital gains realized in such years to the
extent and under the circumstances described in the Tax Act. A
capital gain realized by an individual or a trust (other than
specified trusts) may give rise to a liability for alternative
minimum tax.
As discussed above, a Resident Holder that is a
Canadian-controlled private corporation (as defined
in the Tax Act) may be liable for an additional refundable tax
on investment income. For this purpose, investment income will
generally include taxable capital gains.
Non-Residents
of Canada
The following portion of the summary is generally applicable to
a Holder who, at all relevant times, for purposes of the Tax
Act, is not, and is not deemed to be, a resident of Canada, has
not and will not use or hold or be deemed to use or hold the
Notes in or in the course of carrying on business in Canada and
deals at arms length with any person resident in Canada to
whom the Holder disposes of a Note (a Non-Resident
Holder). Special rules, which are not discussed below, may
apply to a non-resident of Canada that is an insurer which
carries on business in Canada and elsewhere.
Amounts which are, or are deemed to be, interest for purposes of
the Tax Act paid or credited by the Company on the Notes to a
Non-Resident Holder that deals at arms length with the
Company at the time such interest is paid or credited will not
be subject to non-resident withholding tax and no non-resident
withholding tax will apply to the proceeds received by a
Non-Resident Holder on a disposition of a Note, including a
redemption, payment on maturity or purchase for cancellation.
For the purposes of the Tax Act, related persons (as defined in
the Tax Act) are deemed not to deal at arms length and it
is a question of fact whether persons not related to each other
deal at arms length.
No other tax on income or gains will be payable by a
Non-Resident Holder on interest, principal, or premium or on the
proceeds received by a Non-Resident Holder on the disposition of
a Note, including a redemption, payment on maturity or purchase
for cancellation.
Certain
United States Federal Income Tax Considerations
The following is a summary of certain U.S. federal income
tax considerations relating to the purchase, ownership, and
disposition of a Note by a U.S. holder (as defined below)
who purchases such Note pursuant to, and at the price set forth
on the cover of, this prospectus supplement and holds the Note
as a capital asset (generally, property held for
investment) within the meaning of Section 1221 of the
Internal Revenue Code of 1986, as amended (the
Code). This summary is based upon the Code,
administrative pronouncements, judicial decisions and
regulations of the Treasury Department thereof, all as currently
in effect and all of which are subject to change or different
interpretations, possibly with retroactive effect. This summary
does not describe all of the tax considerations that may be
relevant to U.S. holders (as defined below) in light of
their particular circumstances or to holders subject to special
treatment under U.S. federal income tax law, such as
financial institutions; insurance companies; traders or dealers
in securities or currencies; partnerships and their partners;
regulated investment companies; real estate investment trusts;
tax-exempt organizations; persons holding a Note as part of a
straddle, hedge, conversion, constructive sale, or other
integrated security transaction for U.S. federal income tax
purposes; persons having a functional currency other than the
U.S. dollar; or persons owning, actually or constructively,
10% or more of the voting stock of TELUS.
For purposes of this summary, a U.S. holder is
a beneficial owner of a Note that, for U.S. federal income
tax purposes, is (i) an individual who is a citizen or
resident of the U.S., (ii) a corporation, or other entity
treated as a corporation for U.S. federal income tax
purposes, that is created in or organized under the law of the
U.S., any State thereof, or the District of Columbia,
(iii) an estate the income of which is includible in gross
income for U.S. federal income tax purposes regardless of
its source, or (iv) a trust (A) the administration of
which is subject to the primary supervision of a U.S. court
and which has one or more U.S. persons who have the
authority to control all substantial decisions of the trust, or
(B) that elected to be subject to tax as a United States
person under the Code.
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If a partnership, or other entity or arrangement treated as a
partnership for U.S. federal income tax purposes, owns a
Note, the tax treatment of the partner in the partnership will
depend upon the status of the partner and the activities of the
partnership. Partners in a partnership that own a Note should
consult their own tax advisors as to the particular
U.S. federal income tax consequences applicable to them.
Prospective investors should consult their own tax advisors
with regard to the application of the tax considerations
discussed below to their particular situations as well as the
application of any state, local, foreign or other tax laws,
including gift and estate tax laws.
Payment
of Interest
In general, interest (including any Additional Amounts) paid or
payable on a Note to a U.S. holder will be included in the
gross income of a U.S. holder as ordinary interest income
at the time it is accrued or received, in accordance with such
holders method of accounting.
A U.S. holder that uses the cash method of tax accounting
will be required to include in income the U.S. dollar value
of each Canadian dollar interest payment based on the spot rate
of exchange on the date such interest payment is received,
regardless of whether the payment is converted into
U.S. dollars. If the interest payment is converted upon the
date of receipt, a U.S. holder generally should not be
required to recognize foreign currency gain or loss in respect
of the interest income.
A U.S. holder that uses the accrual method of tax
accounting will generally be required to include interest income
on the Note in Canadian dollars and translate such accrued
interest income into U.S. dollars at the average exchange
rate for the accrual period (or, with respect to an accrual
period that spans two taxable years, at the average exchange
rate for the partial period within the relevant taxable year).
Such a holder will recognize exchange gain or loss with respect
to any accrued interest income on the date that payment in
respect of such interest income is received in an amount equal
to the difference between (i) the U.S. dollar value of
such payment, based on the spot rate of exchange on the date
such payment is received, and (ii) the U.S. dollar
value of the amount of interest income accrued in respect of
such payment. Any such foreign currency gain or loss will
generally be treated as U.S. source ordinary income or
loss. Notwithstanding the rule regarding the translation of
accrued interest income described above, an accrual method
U.S. holder may elect to translate accrued interest income
using the spot rate in effect on the last day of the accrual
period (or, with respect to an accrual period that spans two
taxable years, using the spot rate in effect on the last day of
the relevant taxable year). If such election is made and the
last day of an accrual period is within five business days of
the date of receipt of the accrued interest, a U.S. holder
may translate such interest using the spot rate in effect on the
date of such receipt. This election must be applied consistently
to all debt instruments from year to year and cannot be changed
without consent of the U.S. Internal Revenue Service.
Sale,
Exchange, Redemption or Other Taxable Disposition of a
Note
Upon the sale, exchange, redemption or other taxable disposition
of a Note, a U.S. holder will generally recognize capital
gain or loss equal to the difference between (i) the amount
of cash received plus the fair market value of any property
received on such disposition (other than (a) amounts
attributable to accrued interest not previously included in
income, which will be subject to tax as foreign source interest
income, as discussed above, and (b) exchange gain or loss
with respect to the principal amount of the Note, as discussed
below) and (ii) such holders adjusted tax basis in
the Note. A U.S. holders adjusted tax basis in a Note
will generally be the U.S. dollar value of the Canadian
dollar purchase price on the date of purchase calculated at the
spot rate of exchange on that date. The conversion of
U.S. dollars into Canadian dollars and the immediate use of
those Canadian dollars to purchase a Note will generally not
result in a taxable gain or loss to the U.S. holder. Upon
the sale, exchange, redemption, or other taxable disposition of
a Note, the amount realized by a U.S. holder will be the
U.S. dollar value of the Canadian dollar received
calculated at the spot rate of exchange on the date of
disposition.
Except as discussed below in connection with foreign currency
gain or loss on a sale, exchange, redemption, or other taxable
disposition of a Note, such gain or loss attributable to the
sale, exchange, redemption, or other taxable disposition of a
Note will be long-term gain or loss if the
U.S. holders holding period for the Note exceeds one
year. Gain or loss, if any, recognized by a U.S. holder
will generally be treated as U.S. source gain or loss, as
the case may be. The deductibility of capital losses is subject
to limitations under the Code.
U.S. holders are required to recognize any gain or loss
attributable to changes in currency exchange rates upon the
sale, exchange, redemption, or other taxable disposition of a
Note. Such gain or loss will be subject to tax as
U.S. source ordinary income or loss. Exchange gain or loss
with respect to the principal amount of a Note will generally
equal the
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difference between: (1) the U.S. dollar value of the
Canadian dollar purchase price of the Note determined using the
spot exchange rate on the date of the sale, exchange,
redemption, or other taxable disposition, and (2) the
U.S. dollar value of the Canadian dollar purchase price of
the Note, determined using the spot exchange rate on the date
the U.S. holder purchased the Note. Such gain or loss will
be recognized only to the extent of the total gain or loss
realized by the U.S. holder on a sale, exchange,
redemption, or other taxable disposition of the Note.
Receipt
of Canadian Dollars
Canadian dollars received as interest on, or on a disposition
of, a Note will have a tax basis equal to their U.S. dollar
equivalent determined at the spot rate on the date such interest
is received or at the time such proceeds are received. The
amount of gain or loss recognized on a sale or other disposition
of such Canadian dollars will be equal to the difference between
(i) the amount of U.S. dollars, or the fair market
value in U.S. dollars of the other property received in
such sale or other disposition, and (ii) the
U.S. holders tax basis in such Canadian dollars.
A U.S. holder that purchases a Note with previously owned
Canadian dollars will generally recognize gain or loss in an
amount equal to the difference, if any, between such
holders tax basis in such Canadian dollars and the
U.S. fair market value of such Note on the date of
purchase. Any such gain or loss will generally be ordinary
income or loss and will not be treated as interest income or
expense. The conversion of U.S. dollars to Canadian dollars
and the immediate use of such currency to purchase a Note
generally will not result in any foreign currency gain or loss
for a U.S. holder.
Information
Reporting and Backup Withholding
In general, information reporting requirements will apply to
payments of interest on, and gross proceeds from a sale,
exchange, redemption, or other disposition (including repayment
of principal) of, a Note that are made within the
United States or through certain
U.S.-related
financial intermediaries. A U.S. holder of a Note may be
subject to backup withholding with respect to interest paid on
the Note and to proceeds from the sale, exchange, redemption, or
other disposition of a Note. These backup withholding rules
apply if a U.S. holder, among other things, fails to
(i) furnish its correct taxpayer identification number,
(ii) certify under penalties of perjury that such holder is
not subject to backup withholding, or (iii) otherwise
comply with applicable backup withholding requirements.
Backup withholding is not an additional tax. A U.S. holder
will be entitled to credit any amounts withheld under the backup
withholding rules against a holders U.S. federal
income tax liability, provided the required information is
timely furnished to the U.S. Internal Revenue Service. A
holder may generally obtain a refund of any excess amounts
withheld under the backup withholding rules by filing the
appropriate claim for a refund with the U.S. Internal
Revenue Service.
PLAN OF
DISTRIBUTION (CONFLICTS OF INTEREST)
Under an agreement (the Agency Agreement) dated
December 1, 2009 between the Agents and the Company, the
Agents have agreed to act as agents of the Company to offer the
Notes for sale to the public on a best efforts basis, if, as and
when issued by the Company, subject to compliance with all
necessary legal requirements and in accordance with the terms
and conditions of the Agency Agreement. The offering price of
the Notes was established by negotiation between the Company and
the Agents. The Agents will receive a fee equal to
$ l
for each $1,000 principal amount of Notes sold.
The obligations of the Agents under the Agency Agreement may be
terminated in their discretion on the basis of their assessment
of the state of the financial markets and also upon the
occurrence of certain stated events. While the Agents have
agreed to use their best efforts to sell the Notes offered under
this prospectus supplement, the Agents will not be obligated to
purchase any Notes which are not sold.
The Offering is being made in all the provinces of Canada and in
the United States pursuant to a multijurisdictional disclosure
system implemented by securities regulatory authorities in
Canada and the United States. Subject to applicable law, the
Agents may offer the Notes outside Canada, and the United
States. No sales will be effected in any province of Canada by
any Agent not duly registered as a securities dealer under the
laws of such province, other than sales effected pursuant to the
exemptions from the registration requirements under the laws of
such province.
The Notes are offered subject to certain conditions, including
the right of the Company to reject orders in whole or
in part.
In accordance with rules and policy statements of certain
Canadian securities regulators, the Agents may not, throughout
the period of distribution, bid for or purchase Notes. The
foregoing restriction is subject to exceptions, on the condition
that the bid or purchase is not engaged in for the purpose of
creating actual or apparent active trading in, or
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raising prices of, the Notes. These exceptions include a bid or
purchase permitted under the Universal Market Integrity Rules of
the Investment Industry Regulatory Organization of Canada
relating to market stabilization and passive market-making
activities and a bid or purchase made for and on behalf of a
customer where the order was not solicited during the period of
distribution. Subject to the foregoing and applicable laws, in
connection with the Offering, and subject to the first exception
mentioned above, the Agents may engage in over-allotment and
stabilizing transactions and purchases to cover short positions
created by the Agents in connection with the Offering.
Stabilizing transactions consist of certain bids or purchases
for the purpose of preventing or retarding a decline in the
market price of the Notes and short positions created by the
Agents involve the sale by the Agents of a greater number of
Notes than may be offered by the Company in the Offering. These
activities may stabilize, maintain or otherwise affect the
market price of the Notes, which may be higher than the price
that might otherwise prevail in the open market; these
activities, if commenced, may be discontinued at any time. These
transactions may be effected in the
over-the-counter
market or otherwise.
The Company and the Agents have agreed to indemnify each other
against certain liabilities, including liabilities under
Canadian provincial securities legislation and the United States
Securities Act of 1933, as amended. There is no public market
for the Notes and the Company does not intend to list the Notes
on any exchange.
Each of the Agents, other than Cannacord Financial Ltd., is an
affiliate of a financial institution which is a lender to the
Company under the 2007 Credit Facility. Each of the Agents,
other than TD Securities Inc., National Bank Financial Inc.,
Desjardins Securities Inc. and Cannacord Financial Ltd., is an
affiliate of a financial institution that is a lender under the
2008 Credit Facility. Additionally, each of the Agents, other
than HSBC Securities (Canada) Inc., Desjardins Securities Inc.
and Cannacord Financial Ltd., is an affiliate of a financial
institution that is a counterparty to certain cross currency and
interest rate swaps with the Company. Consequently, the Company
may be considered to be a connected issuer of each such
Agent for purposes of the securities legislation of certain
Canadian provinces.
The 2007 Credit Facility consists of a $2 billion unsecured
revolving credit facility maturing May 1, 2012 (as of
September 30, 2009, approximately $221 million has
been utilized in the form of letters of credit, approximately
$534 million has been utilized by backstopping outstanding
commercial paper and approximately $1,245 million remains
available). The 2008 Credit Facility consists of a
$300 million unsecured revolving credit facility maturing
December 31, 2010 (as of September 30, 2009, the
facility has not been utilized and all $300 million remains
available).
A portion of the net proceeds of this Offering will be used for
payments required to terminate the cross-currency interest rate
swaps associated with
U.S.$ l million
of the Companys outstanding U.S.$1.945 billion 8%
Notes due June 1, 2011,
U.S.$ l million
of which are to be redeemed with a portion of the net proceeds
of this Offering.
TELUS is and has been in compliance with the terms of the 2007
Credit Facility, the 2008 Credit Facility and the cross-currency
interest rate swaps. None of the lenders under the 2007 Credit
Facility or the 2008 Credit Facility, the counterparties under
the cross-currency interest rate swaps, or the Agents were
involved in the Companys decision to distribute the Notes
offered hereby. The Agents negotiated the terms and conditions
of the Offering and will not benefit in any manner from the
Offering other than the payment of their fees as described
above. The proceeds of the Offering will not be applied for the
benefit of the Agents or their affiliates, other than as
described above.
Certain of the Agents and their respective affiliates may have
in the past performed, and may in the future perform, various
financial advisory, investment banking and commercial lending
services for TELUS and its affiliates in the ordinary course of
business, for which they have received and will receive
customary fees and commissions.
As described under Use of Proceeds, a portion of the
net proceeds of this Offering will be used to fund the
Companys redemption
on l of
U.S.$ l
million principal amount of the Companys outstanding
U.S.$1.945 billion 8% Notes due June 1, 2011 and
for payments required to terminate cross-currency interest rate
swaps associated with the notes to be redeemed. Since more than
5% of the proceeds from this Offering, not including
underwriting compensation, may be received by the affiliates of
the Agents in this Offering, this Offering is being conducted in
compliance with NASD Rule 2720, as administered by FINRA.
Pursuant to that rule, the appointment of a qualified
independent underwriter is not necessary in connection with this
Offering, as this Offering is of a class of securities rated BBB
or better by S&P or Baa or better by Moodys or rated
in a comparable category by another rating service acceptable to
FINRA.
LEGAL
MATTERS
Certain legal matters in connection with the Offering will be
passed upon on behalf of the Company by Bennett Jones LLP,
Toronto, Ontario and by Skadden, Arps, Slate, Meagher &
Flom, LLP, New York, New York and on behalf of the
S-28
Agents by Osler, Hoskin & Harcourt LLP, Toronto, Ontario
and New York, New York. The partners and associates of each of
such law firms as a group each beneficially own, directly or
indirectly, less than one percent of the outstanding securities
of the Company.
AUDITORS,
REGISTRAR AND TRANSFER AGENT
The Auditors for the Company are Deloitte & Touche
LLP, Chartered Accountants, 1055 Dunsmuir Street,
Suite 2100, Vancouver, British Columbia V7X 1P4.
Deloitte & Touche LLP are independent within the
meaning of the Rules of Professional Conduct of the Institute of
Chartered Accountants of British Columbia.
Registers for the registration and transfer of the Notes issued
in registered form will be kept at the principal offices of the
Trustee in the City of Calgary, Alberta.
S-29
CONSENT
OF INDEPENDENT REGISTERED CHARTERED ACCOUNTANTS
We have read the preliminary prospectus supplement of TELUS
Corporation (the Company)
dated December 1, 2009 to the short form base
shelf prospectus dated September 3, 2009, relating to the
offering of the Series CG Notes of the Company
(collectively the Prospectus). We have complied with
Canadian generally accepted standards for an auditors
involvement with offering documents.
We consent to the incorporation by reference in the
above-mentioned Prospectus of (i) our report to the Board of
Directors and Shareholders of the Company on the consolidated
statements of financial position of the Company and subsidiaries
as at December 31, 2008 and 2007; and the consolidated
statements of income and other comprehensive income, retained
earnings and accumulated other comprehensive income (loss) and
cash flows for the years then ended and (ii) our report to the
Board of Directors and Shareholders of the Company on the
effectiveness of the Companys internal control over
financial reporting as of December 31, 2008. Our reports
are dated February 11, 2009.
Deloitte & Touche LLP
Independent
Registered Chartered Accountants
Vancouver, Canada
December 1, 2009
S-30
No securities regulatory
authority has expressed an opinion about the securities and it
is an offence to claim otherwise.
This short form base shelf
prospectus has been filed under legislation in each of the
provinces of Canada that permits certain information about the
securities to be determined after this prospectus has become
final and that permits the omission from this prospectus of that
information. The legislation requires the delivery to purchasers
of a prospectus supplement containing the omitted information
within a specified period of time after agreeing to purchase any
of the securities.
Information has been
incorporated by reference in this short form base shelf
prospectus from documents filed with securities commissions or
similar authorities in Canada.
Copies of
documents incorporated by reference herein may be obtained on
request without charge from the Senior Vice President, Chief
General Counsel and Corporate Secretary of TELUS at
3777 Kingsway, Burnaby, British Columbia, V5H 3Z7
(telephone 604.697.8029) and are also available electronically
on the System for Electronic Document Analysis and Retrieval of
the Canadian Securities Administrators (SEDAR) at
www.sedar.com.
SHORT FORM BASE SHELF PROSPECTUS
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New
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September 3,
2009
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TELUS Corporation
$4,000,000,000
Debt Securities
Preferred Shares
Non-Voting Shares
Common Shares
Warrants to Purchase Equity
Securities
Warrants to Purchase Debt
Securities
Share Purchase
Contracts
Share Purchase or Equity
Units
TELUS Corporation (TELUS or the Company)
may offer and issue from time to time any bonds, debentures,
notes or other evidences of indebtedness of any kind, nature or
description (Debt Securities), preferred shares,
non-voting shares and common shares (the Equity
Securities), warrants to purchase Equity Securities and
warrants to purchase Debt Securities (the Warrants),
share purchase contracts and share purchase or equity units (all
of the foregoing, collectively, the Securities) of
up to $4,000,000,000 aggregate initial offering price of
Securities (or the equivalent thereof in one or more foreign
currencies or composite currencies, including United States
dollars) during the 25 month period that this short form
base shelf prospectus (the Prospectus), including
any amendments thereto, is valid. Securities may be offered
separately or together, in amounts, at prices and on terms to be
determined based on market conditions at the time of sale and
set forth in an accompanying shelf prospectus supplement (a
Prospectus Supplement).
The specific terms of the Securities with respect to a
particular offering will be set out in the applicable Prospectus
Supplement and may include, where applicable (i) in the
case of Debt Securities, the specific designation, aggregate
principal amount, the currency or the currency unit for which
the Debt Securities may be purchased, the maturity, interest
provisions, authorized denominations, offering price, covenants,
events of default, any terms for redemption or retraction, any
exchange or conversion terms, whether the debt is senior or
subordinated and any other terms specific to the Debt Securities
being offered; (ii) in the case of Equity Securities, the
designation of the particular class and series, the number of
shares offered, the issue price, dividend rate, if any, and any
other terms specific to the Equity Securities being offered;
(iii) in the case of Warrants, the designation, number and
terms of the Equity Securities or Debt Securities purchasable
upon exercise of the Warrants, any procedures that will result
in the adjustment of these numbers, the exercise price, dates
and periods of exercise, the currency in which the Warrants are
issued and any other specific terms; (iv) in the case of
share purchase contracts, the designation, number and terms of
the Equity Securities to be purchased under the share purchase
contract, any procedures that will result in the adjustment of
these numbers, the purchase price and purchase date or dates of
the Equity Securities, any requirements of the purchaser to
secure its obligations under the share purchase contract and any
other specific terms; and (v) in the case of share purchase
or equity units, the terms of the component share purchase
contract and Debt Securities or third party obligations, any
requirements of the purchaser to secure its obligations under
the share purchase contract by the Debt Securities or third
party obligations and any other specific terms. Where required
by statute, regulation or policy, and where Securities are
offered in currencies other than Canadian dollars, appropriate
disclosure of foreign exchange rates applicable to such
Securities will be included in the Prospectus Supplement
describing such Securities.
(Continued on next
page)
(Continued from previous
page)
All information permitted under applicable securities laws to be
omitted from this Prospectus will be contained in one or more
Prospectus Supplements that will be delivered to purchasers
together with this Prospectus. Each Prospectus Supplement will
be deemed to be incorporated by reference into this Prospectus
as of the date of the Prospectus Supplement and only for the
purposes of the distribution of the Securities to which the
Prospectus Supplement pertains.
TELUS has filed an undertaking with each of the securities
commissions or similar regulatory authorities in Canada that it
will not distribute Securities that, at the time of
distribution, are novel specified derivatives or asset-backed
securities, warrants to purchase equity or debt securities
issued separate from other Securities, share purchase contracts,
or share purchase or equity units, without
pre-clearing
with the applicable regulator the disclosure to be contained in
the Prospectus Supplement pertaining to the distribution of such
Securities.
For the purpose of calculating the Canadian dollar equivalent of
the aggregate principal amount of Securities issued under this
Prospectus from time to time, Securities denominated in or
issued in, as applicable, a currency (the Securities
Currency) other than Canadian dollars will be translated
into Canadian dollars at the date of issue of such Securities
using the Bank of Canada noon rate of exchange of Canadian
dollars with the Securities Currency in effect as of noon
(Toronto time) on the date of issue of such Securities.
TELUS is incorporated under the laws of the Province of British
Columbia. It maintains its registered office at Floor 21,
3777 Kingsway, Burnaby, British Columbia, V5H 3Z7 and its
executive office at Floor 8, 555 Robson Street, Vancouver,
British Columbia, V6B 3K9.
This offering is made by a Canadian issuer that is permitted,
under a multijurisdictional disclosure system adopted by the
United States, to prepare this Prospectus in accordance with the
disclosure requirements of Canada. Prospective investors in the
United States should be aware that such requirements are
different from those of the United States. The financial
statements included or incorporated herein have been prepared in
accordance with Canadian generally accepted accounting
principles, and may be subject to Canadian auditing standards,
and, thus, may not be comparable to financial statements of
United States companies.
Prospective investors should be aware that acquisition of the
Securities described herein may have tax consequences both in
the United States and in Canada. Such consequences for investors
who are resident in, or citizens of, the United States may not
be described fully herein.
The enforcement by investors of civil liabilities under the
United States federal securities laws may be affected adversely
by the fact that TELUS is incorporated or organized under the
laws of the Province of British Columbia, that some or all of
its officers and directors may be residents of Canada, that some
or all of the underwriters or experts named in the Prospectus
may be residents of Canada, and that all or a substantial
portion of the assets of TELUS and said persons may be located
outside the United States.
The Securities have not been approved or disapproved by the
United States Securities and Exchange Commission nor has the
United States Securities and Exchange Commission passed upon the
accuracy or adequacy of this Prospectus. Any representation to
the contrary is a criminal offense.
This Prospectus constitutes a public offering of the Securities
only in those jurisdictions where they may be lawfully offered
for sale and therein only by persons permitted to sell such
Securities. The Company may offer and sell Securities to or
through underwriters or dealers and also may offer and sell
certain Securities directly to other purchasers or through
agents. A Prospectus Supplement relating to each issue of
Securities offered thereby will set forth the names of any
underwriters, dealers or agents involved in the sale of such
Securities and the compensation of any such underwriters,
dealers or agents. The common shares (Common Shares)
and the non-voting shares (Non-Voting Shares) of
TELUS are listed on the Toronto Stock Exchange (TSX)
under the symbols T and T.A.,
respectively, and the non-voting shares of TELUS are also listed
on the New York Stock Exchange under the symbol TU.
Unless otherwise specified in the applicable Prospectus
Supplement, Securities other than the common shares and
non-voting shares of TELUS will not be listed on any securities
exchange.
The offering of Securities hereunder is subject to approval of
certain legal matters on behalf of TELUS by Bennett Jones LLP,
Toronto, Ontario and by Skadden, Arps, Slate,
Meagher & Flom LLP, New York, New York.
ii
TABLE OF
CONTENTS
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Unless the context otherwise indicates, references in this
Prospectus to TELUS or the Company are
references to TELUS Corporation, its consolidated subsidiaries
and predecessor companies.
DOCUMENTS
INCORPORATED BY REFERENCE
The following documents of the Company, which have been filed by
the Company with the securities commissions or similar
regulatory authorities in each of the provinces of Canada, are
specifically incorporated by reference into, and form an
integral part of, this Prospectus:
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(a)
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the annual information form of the Company dated March 13,
2009 for the year ended December 31, 2008;
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(b)
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the audited consolidated financial statements of the Company as
at and for the years ended December 31, 2008 and 2007
(the Annual Financial Statements) together with
the report of the auditors thereon and the notes thereto;
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(c)
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Managements Discussion and Analysis of financial results
for the year ended December 31, 2008;
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(d)
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the unaudited interim consolidated financial statements of the
Company as at and for the three-month and
six-month
periods ended June 30, 2009 and June 30, 2008 together
with the notes thereto;
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(e)
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Managements Discussion and Analysis of financial results
for the three-month and six-month periods ended June 30,
2009; and
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(f)
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the Information Circular dated March 13, 2009 prepared in
connection with the Companys annual meeting held on
May 7, 2009.
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Any documents of the types referred to above, and similar
material, together with any material change reports (excluding
confidential reports), business acquisition reports filed by the
Company pursuant to the requirements of securities legislation
of any province of Canada, and any other disclosure document
which the Company has filed pursuant to an undertaking to a
securities regulatory authority of any province of Canada, in
each case, after the date of this Prospectus and prior to the
date on which this Prospectus ceases to be effective, shall be
deemed to be incorporated by reference into this Prospectus. In
addition, to the extent indicated in any Report on
Form 6-K
filed with the United States Securities and Exchange Commission
(the SEC) or in any Report on
Form 40-F
filed with the SEC, any information included therein shall be
deemed to be incorporated by reference in this Prospectus.
1
Any statement contained in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be
modified or superseded for the purposes of this Prospectus to
the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such
statement. The modifying or superseding statement need not state
that it has modified or superseded a prior statement or include
any other information set forth in the document which it
modifies or supersedes. The making of such a modifying or
superseding statement shall not be deemed an admission for any
purposes that the modified or superseded statement, when made,
constituted a misrepresentation, an untrue statement of a
material fact or an omission to state a material fact that is
required to be stated or that is necessary to make a statement
not misleading in light of the circumstances in which it was
made. Any statement so modified or superseded shall not
constitute a part of this Prospectus, except as so modified or
superseded.
A Prospectus Supplement containing the specific terms of an
offering of Securities, updated disclosure of earnings coverage
ratios, if applicable, and other information relating to the
Securities, will be delivered to prospective purchasers of such
Securities together with this Prospectus and will be deemed to
be incorporated into this Prospectus as of the date of such
Prospectus Supplement only for the purpose of the offering of
the Securities covered by that Prospectus Supplement.
Upon a new annual information form and the related audited
annual financial statements being filed by the Company with and,
where required, accepted by, the applicable securities
regulatory authorities during the currency of this Prospectus,
the previous annual information form, the previous audited
annual financial statements and all unaudited interim financial
statements, and the accompanying Managements Discussion
and Analysis, and material change reports filed prior to the
commencement of the Companys financial year in which the
new annual information form is filed, and information circulars
and business acquisition reports filed prior to the commencement
of the Companys financial year in respect of which the new
annual information form is filed, shall be deemed no longer to
be incorporated into this Prospectus for purposes of further
offers and sales of Securities hereunder. Upon unaudited interim
financial statements and the accompanying Managements
Discussion and Analysis being filed with the applicable
securities regulatory authorities during the currency of this
Prospectus, all unaudited interim financial statements and the
accompanying Managements Discussion and Analysis filed
prior to the new interim financial statements will be deemed no
longer to be incorporated into this Prospectus for purposes of
further offers and sales of Securities hereunder. Upon the
Company filing an information circular in connection with an
annual general meeting, the information circular filed in
connection with the previous annual general meeting (unless such
information circular also related to a special meeting) will be
deemed no longer to be incorporated into this Prospectus for
purposes of further offers and sales of the Securities hereunder.
In addition to its continuous disclosure obligations under the
securities laws of the provinces of Canada, TELUS is subject to
the information requirements of the United States Securities
Exchange Act of 1934, as amended, and in accordance
therewith files reports and other information with the SEC.
Under the multijurisdictional disclosure system adopted by the
United States, such reports and other information may be
prepared in accordance with the disclosure requirements of
Canada, which requirements are different from those of the
United States. Such reports and other information, when filed by
TELUS in accordance with such requirements, can be inspected and
copied at the public reference facilities maintained by the SEC
at 100 F Street, N.E., Washington, D.C., 20549. Copies of such
material can be obtained at prescribed rates from such public
reference facilities of the SEC at 100 F Street, N.E.,
Washington, D.C., 20549. In addition, such materials are also
available to the public on the SECs website at
www.sec.gov. Certain securities of TELUS are listed on
The New York Stock Exchange and reports and other information
concerning TELUS can be inspected at the offices of the New York
Stock Exchange, 20 Broad Street, New York, New York, 10005.
Prospective investors should rely only on the information
contained in or incorporated by reference in this Prospectus or
any applicable Prospectus Supplement. The Company has not
authorized anyone to provide prospective investors with
different or additional information. The Company is not making
an offer of the Securities in any jurisdiction where the offer
is not permitted by law. Prospective investors should not assume
that the information contained in or incorporated by reference
in this Prospectus or any applicable Prospectus Supplement is
accurate as of any date other than the date on the front of this
Prospectus or the applicable Prospectus Supplement.
2
REFERENCE
TO CURRENCY
Unless the context otherwise requires, all references herein to
currency are references to Canadian dollars. For Securities
issued in other than Canadian currency, potential purchasers
should be aware that foreign exchange fluctuations are likely to
occur from time to time and that the Company does not make any
representation with respect to currency values from time to
time. Investors should consult their own advisors with respect
to the potential risk of currency fluctuations.
FORWARD-LOOKING
STATEMENTS
This Prospectus, together with the documents incorporated by
reference herein and therein, contain statements about expected
future events and financial and operating results of
TELUS that are forward-looking. By their nature,
forward-looking statements require the Company to make
assumptions, and forward-looking statements are subject to
inherent risks and uncertainties. There is significant risk that
assumptions, predictions and other forward-looking statements
will not prove to be accurate. Readers are cautioned not to
place undue reliance on forward-looking statements as a number
of factors could cause actual future results, conditions,
actions or events to differ materially from the targets,
expectations, estimates or intentions expressed. Except as
required by law, the Company disclaims any intention or
obligation to update or revise any forward-looking statements,
and reserves the right to change, at any time at its sole
discretion, its current practice of updating annual targets and
guidance. Annual targets, revised guidance and related
assumptions for 2009 are described in Section 9: Annual
guidance for 2009 of the Companys Managements
Discussion and Analysis of financial results for the three-month
and six-month periods ended June 30, 2009.
Factors that could cause actual results to differ materially
include, but are not limited to:
Competition (including more active price competition and the
likelihood of new wireless competitors beginning to offer
services in late 2009 and into 2010 as a result of the 2008
advanced wireless services (AWS) spectrum auction); economic
growth and fluctuations (including the global credit crisis and
economic recession in Canada, and pension performance, funding
and expenses); capital expenditure levels (increasing in 2009
and potentially in future years due to the Companys fourth
generation (4G) wireless deployment strategy and any new
Industry Canada wireless spectrum auctions); financing and debt
requirements (including ability to carry out refinancing
activities and fund share repurchases); tax matters (including
acceleration or deferral of required payments of significant
amounts of cash taxes); human resource developments; business
integrations and internal reorganizations (including ability to
successfully implement cost reduction initiatives); technology
(including reliance on systems and information technology,
broadband and wireless technology options, choice of suppliers
and suppliers ability to maintain and service their
product lines, expected technology and evolution path and
transition to 4G technology, expected future benefits and
performance of high-speed packet access (HSPA)/long-term
evolution (LTE) wireless technology, successful implementation
of the network build and sharing arrangement with Bell Canada to
achieve cost efficiencies and reduce deployment risks,
successful deployment and operation of new wireless networks and
successful introduction of new products, services and supporting
systems); regulatory approvals and developments (including
interpretation and application of tower sharing and roaming
rules, the design and impact of future spectrum auctions, the
review of new media and Internet traffic management practices,
new regulatory charges to broadcast distribution undertakings
(BDUs) to compensate broadcasters for local signals, and
possible changes to foreign ownership restrictions); process
risks (including conversion of legacy systems and billing system
integrations, and implementation of large complex enterprise
deals that may be adversely impacted by available resources and
degree of cooperation from other service providers); health,
safety and environmental developments; litigation and legal
matters; business continuity events (including manmade and
natural threats); any future acquisitions or divestitures; and
other risk factors discussed herein or listed from time to time
in TELUS reports and public disclosure documents including
its annual report, annual information form, financial
statements, Managements Discussion and Analysis, and other
filings with securities commissions in Canada (on SEDAR at
www.sedar.com) and in its filings in the United States,
including
Form 40-F
(on EDGAR at www.sec.gov).
3
TELUS
CORPORATION
TELUS was incorporated under the Company Act (British
Columbia) (the BC Company Act) on October 26,
1998 under the name BCT.TELUS Communications Inc.
(BCT). On January 31, 1999, pursuant to a
court-approved plan of arrangement under the Canada Business
Corporations Act among BCT, BC TELECOM Inc. (BC
TELECOM) and the former Alberta based TELUS Corporation
(TC), BCT acquired all of the shares of each of BC
TELECOM and TC in exchange for common shares and non-voting
shares of BCT and BC TELECOM was dissolved. On May 3, 2000,
BCT changed its name to TELUS Corporation and in February 2005,
the Company transitioned under the Business Corporations
Act (British Columbia), successor to the BC Company Act.
TELUS maintains its registered office at Floor 21,
3777 Kingsway, Burnaby, British Columbia, V5H 3Z7 and
its executive office at Floor 8, 555 Robson Street, Vancouver,
British Columbia, V6B 3K9.
TELUS is a leading national telecommunications company in
Canada, offering a wide range of wireline and wireless
communications products and services including data, voice and
entertainment.
USE OF
PROCEEDS
Except as may otherwise be set forth in a Prospectus Supplement,
the net proceeds to be received by the Company from the issue
and sale from time to time of Securities will be added to the
general funds of the Company to be used to repay existing
indebtedness of TELUS, to fund capital expenditures and for
other general corporate purposes. Each Prospectus Supplement
will contain specific information concerning the use of proceeds
from that sale of Securities.
EARNINGS
COVERAGE RATIOS
For the
12-month
periods ended December 31, 2008 and June 30, 2009, the
Companys consolidated earnings before income taxes and
gross interest expense was $2,035 million and
$1,965 million, respectively. Gross interest expense for
each of these 12-month periods was $468 million and
$470 million, respectively. The earnings coverage ratio
refers to the ratio of (i) consolidated earnings before
income taxes and gross interest expense and (ii) gross
interest expense. The following earnings coverage ratios were
calculated on a consolidated basis for the
12-month
periods ended December 31, 2008 and June 30, 2009:
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December 31, 2008
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June 30, 2009
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Earnings coverage on long-term debt obligations
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4.3 times
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4.2 times
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The earnings coverage ratios set out above do not give effect to
any offering of Securities pursuant to this Prospectus or to any
other change in indebtedness not reflected in the financial
statements of the Company for the
12-month
periods ended December 31, 2008 and June 30, 2009.
Long-term debt includes the current portion of long-term debt.
The earnings coverage ratio for the
12-month
period ended June 30, 2009 is based on unaudited financial
information. These ratios do not purport to be indicative of
earnings coverage ratios for any future periods.
PRIOR
SALES
Pursuant to the Companys various employee stock option
plans, during the
12-month
period ending on September 2, 2009, the Company
(i) granted 2,581,706 options to acquire an aggregate of
2,581,706 Non-Voting Shares at a weighted average exercise price
of $30.64 per share, (ii) issued 1,506 Common Shares on the
exercise of 1,506 options at a weighted average price of $27.79
per share; and (iii) issued 25,320 Non-Voting Shares on the
exercise of 44,021 options at a weighted average price of $23.29
per share. On May 14, 2009, the Company issued Notes due
May 14, 2014 in an aggregate principal amount of
$700 million.
4
MARKET
PRICE AND TRADING VOLUME
The Common Shares and the Non-Voting Shares of the Company are
listed for trading on the TSX under the symbols T
and T.A., respectively. The following table
summarizes the market price and trading volumes on the TSX for
the previous 12 months.
Common
Shares
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Price Range
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High
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Low
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Volume
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($)
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($)
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2008
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September
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43.76
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36.01
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25,541,546
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October
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43.65
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34.12
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24,579,348
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November
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|
|
43.66
|
|
|
|
33.80
|
|
|
|
17,477,074
|
|
December
|
|
|
39.50
|
|
|
|
32.27
|
|
|
|
19,241,286
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
January
|
|
|
37.50
|
|
|
|
33.17
|
|
|
|
13,580,916
|
|
February
|
|
|
35.26
|
|
|
|
31.19
|
|
|
|
13,649,159
|
|
March
|
|
|
35.95
|
|
|
|
30.63
|
|
|
|
14,724,191
|
|
April
|
|
|
36.50
|
|
|
|
29.12
|
|
|
|
21,886,588
|
|
May
|
|
|
32.57
|
|
|
|
29.12
|
|
|
|
17,976,644
|
|
June
|
|
|
33.11
|
|
|
|
30.13
|
|
|
|
16,930,860
|
|
July
|
|
|
31.95
|
|
|
|
29.68
|
|
|
|
15,957,176
|
|
August
|
|
|
34.34
|
|
|
|
30.76
|
|
|
|
14,082,829
|
|
September 1 2
|
|
|
34.00
|
|
|
|
32.29
|
|
|
|
1,738,911
|
|
Non-Voting
Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Price Range
|
|
|
|
High
|
|
|
Low
|
|
|
Volume
|
|
|
|
($)
|
|
|
($)
|
|
|
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
September
|
|
|
42.00
|
|
|
|
35.29
|
|
|
|
10,581,303
|
|
October
|
|
|
40.50
|
|
|
|
31.83
|
|
|
|
10,290,592
|
|
November
|
|
|
41.12
|
|
|
|
31.46
|
|
|
|
11,888,739
|
|
December
|
|
|
36.91
|
|
|
|
29.70
|
|
|
|
11,037,789
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
January
|
|
|
35.15
|
|
|
|
31.59
|
|
|
|
7,349,642
|
|
February
|
|
|
33.31
|
|
|
|
29.32
|
|
|
|
7,452,180
|
|
March
|
|
|
34.48
|
|
|
|
29.18
|
|
|
|
9,124,553
|
|
April
|
|
|
34.99
|
|
|
|
27.69
|
|
|
|
13,755,163
|
|
May
|
|
|
31.50
|
|
|
|
27.41
|
|
|
|
11,147,646
|
|
June
|
|
|
31.78
|
|
|
|
29.00
|
|
|
|
6,794,306
|
|
July
|
|
|
30.89
|
|
|
|
28.65
|
|
|
|
6,363,854
|
|
August
|
|
|
32.85
|
|
|
|
29.66
|
|
|
|
6,399,574
|
|
September 1 2
|
|
|
32.67
|
|
|
|
31.28
|
|
|
|
924,447
|
|
DESCRIPTION
OF DEBT SECURITIES
The following description of the terms of Debt Securities sets
forth certain general terms and provisions of Debt Securities in
respect of which a Prospectus Supplement will be filed. The
particular terms and provisions of Debt Securities offered by
any Prospectus Supplement will be described in the Prospectus
Supplement filed in respect of such Debt Securities.
5
Debt Securities will be issued under an indenture dated
May 22, 2001 (the Trust Indenture) between
the Company and Computershare Trust Company of Canada (the
Trustee), as supplemented by supplemental indentures
applicable to specific Debt Securities (the
Indenture). The following summary of certain
provisions of the Trust Indenture does not purport to be
complete and is qualified in its entirety by reference to the
Trust Indenture and any applicable supplemental indentures.
All capitalized terms are as defined in the Trust Indenture
(unless otherwise defined herein).
General
The Trust Indenture provides that Debt Securities may be
issued thereunder from time to time in one or more series.
Specific terms and conditions which apply to such series will be
set out in a supplement to the Trust Indenture. The Debt
Securities will be direct, unconditional and, unless otherwise
indicated in the relevant Prospectus Supplement, unsecured
obligations of the Company. As of September 1, 2009,
$2,500 million principal amount of Canadian
dollar-denominated Debt Securities and US$1,925 million
principal amount of US dollar-denominated Debt Securities are
outstanding under the Trust Indenture.
The Prospectus Supplement relating to the particular Debt
Securities offered thereby will describe the terms of such Debt
Securities, including, where applicable:
|
|
|
|
(i)
|
the designation, aggregate principal amount and denominations of
such Debt Securities;
|
|
|
(ii)
|
the price at which such Debt Securities will be issued or
whether such Debt Securities will be issued on a non-fixed price
basis;
|
|
|
(iii)
|
the date or dates on which such Debt Securities will mature and
the portion (if less than all of the principal amount) of such
Debt Securities to be payable upon declaration of an
acceleration of maturity;
|
|
|
(iv)
|
the currency or currencies in which such Debt Securities are
being sold and in which the principal of (and premium, if any),
and interest, if any, on, such Debt Securities will be payable,
whether the holder of any such Debt Securities or the Company
may elect the currency in which payments thereon are to be made
and if so, the manner of such election;
|
|
|
(v)
|
whether the Debt Securities of such series are interest bearing
and, in the case of interest bearing Debt Securities, the rate
or rates (which may be fixed or variable) per annum at which
such Debt Securities will bear interest, if any;
|
|
|
(vi)
|
the date from which interest on such Debt Securities, whether
payable in cash, in kind, or in shares, will accrue, the date or
dates on which such interest will be payable and the date on
which payment of such interest will commence;
|
|
|
(vii)
|
the dates on which and the price or prices at which such Debt
Securities will, pursuant to any required repayment provisions,
or may, pursuant to any repurchase or redemption provisions, be
repurchased, redeemed or repaid and the other terms and
provisions of any such optional repurchase or redemption or
required repayment;
|
|
|
(viii)
|
any special provisions for the payment of additional interest
with respect to such Debt Securities;
|
|
|
(ix)
|
any additional covenants included for the benefit of holders of
such Debt Securities;
|
|
|
(x)
|
the general terms or provisions, if any, pursuant to which such
Debt Securities are to be guaranteed or secured;
|
|
|
(xi)
|
any additional events of default provided with respect to such
Debt Securities;
|
|
|
(xii)
|
any exchange on which Debt Securities of a series will be listed;
|
|
|
(xiii)
|
terms for any conversion or exchange into other securities;
|
|
|
(xiv)
|
subordination terms, if any, of the Debt Securities of such
series;
|
|
|
(xv)
|
any special tax implications of or any special tax provision, or
indemnities relating to Debt Securities of such series; and
|
|
|
(xvi)
|
any other terms of such Debt Securities.
|
Payment
Unless otherwise specified in the applicable Prospectus
Supplement, payment of principal of (and premium, if any on)
Debt Securities will be made in the designated currency against
surrender of such Debt Securities at the office of the
6
Trustee in Toronto. Unless otherwise indicated in the Prospectus
Supplement related thereto, payment of any instalment of
interest on Debt Securities will be made to the Person (as
defined below) in whose name such Debt Security is registered
immediately prior to the close of business on the record date
for such interest by electronic funds transfer.
Negative
Pledge
The Trust Indenture contains provisions to the effect that
the Company will not, nor will it permit any Restricted
Subsidiary (as defined below) to, create or assume any Lien (as
defined below) upon any present or future Principal Property (as
defined below), or any Property (as defined below) which,
together with any other Property subject to Liens in the same
transaction or a series of related transactions, would in the
aggregate constitute a Principal Property, of the Company or any
Restricted Subsidiary, to secure Indebtedness (as defined below)
of the Company or a Restricted Subsidiary unless the Debt
Securities, other than Debt Securities which by their terms do
not have the benefit of the Negative Pledge (together with, if
the Company shall so determine, any other Indebtedness of the
Company or any Restricted Subsidiary ranking at least equally
with the Debt Securities then existing or thereafter created),
shall be concurrently secured equally and ratably with (or prior
to) such other Indebtedness so long as such Lien is outstanding.
The restrictions set forth above shall not apply to
Permitted Liens, which are defined in the
Trust Indenture to include:
|
|
|
|
(i)
|
with respect to any series of Debt Securities, Liens existing on
the Closing Date (as defined below) for such series;
|
|
|
(ii)
|
Liens on any Property of any Person existing at the time such
Person becomes a Restricted Subsidiary, or at the time such
Person amalgamates or merges with the Company or a Restricted
Subsidiary, which Liens are not created in contemplation of such
Person becoming a Restricted Subsidiary or effecting such
amalgamation or merger;
|
|
|
(iii)
|
Liens on any Property existing at the time such Property is
acquired by the Company or a Restricted Subsidiary, or Liens to
secure the payment of all or any part of the purchase price of
such Property upon the acquisition of such Property by the
Company or a Restricted Subsidiary or to secure any Indebtedness
incurred prior to, at the time of, or within 270 days
after, the later of the date of acquisition of such Property and
the date such Property is placed in service, for the purpose of
financing all or any part of the purchase price thereof, or
Liens to secure any Indebtedness incurred for the purpose of
financing the cost to the Company or a Restricted Subsidiary of
improvements to such acquired Property or to secure any
indebtedness incurred for the purpose of financing all or any
part of the purchase price or the cost of construction of the
Property subject to such Liens;
|
|
|
(iv)
|
Liens securing any Indebtedness of a Restricted Subsidiary owing
to the Company or to another Restricted Subsidiary;
|
|
|
(v)
|
Liens on Property of the Company or a Restricted Subsidiary
securing indebtedness or other obligations issued by Canada or
the United States of America or any state or any department,
agency or instrumentality or political subdivision of Canada or
the United States of America or any state, or by any other
country or any political subdivision of any other country, for
the purpose of financing all or any part of the purchase price
of, or, in the case of real property, the cost of construction
on or improvement of, any property or assets subject to the
Liens, including Liens incurred in connection with pollution
control, industrial revenue or similar financings;
|
|
|
(vi)
|
Liens securing any extension, renewal or replacement (or
successive extensions, renewals or replacements) in whole or in
part of any Permitted Lien pursuant to the Trust Indenture;
provided, however, that such new Lien is limited to the Property
which was subject to the prior Lien immediately before such
extension, renewal or replacement, and provided, further, that
the principal amount of Indebtedness secured by the prior Lien
immediately prior to such extension, renewal or replacement is
not increased;
|
|
|
(vii)
|
any other Liens not otherwise qualifying as a Permitted Lien
provided that, at the applicable time, the aggregate principal
amount of the Indebtedness secured by all such other Liens, when
added to the Attributable Debt determined at such time of the
then outstanding Unrestricted Sale and Lease-Back Transactions
(as defined below) to which the Company or a Restricted
Subsidiary is a party, does not exceed 15% of the then
applicable Consolidated Net Tangible Assets (as defined below);
|
|
|
(viii)
|
any interest or title of a lessor in the property subject to any
capitalized lease or operating lease; and
|
7
|
|
|
|
(ix)
|
any other Liens identified in the Prospectus Supplement relating
to the series of Debt Securities issued.
|
Limitation
on Sale and Lease-Back Transactions
Neither the Company nor any Restricted Subsidiary may enter into
any Sale and Lease-Back Transaction (as defined below), except
for:
|
|
|
|
(i)
|
any Sale and Lease-Back Transaction constituting a Permitted
Lien under the Trust Indenture (other than clause
(vii) or (viii)) in the previous section; or
|
|
|
(ii)
|
any Sale and Lease-Back Transaction that is not otherwise
permitted under clause (i) above or (iii) below, and
in respect of which the Company or such Restricted Subsidiary
would be entitled, in the manner described under Negative
Pledge above, to incur Indebtedness secured by a Lien on
the applicable Property at least equal in amount to the
Attributable Debt in respect of such Sale and Lease-Back
Transaction without equally and ratably securing the Debt
Securities (any Sale and Lease-Back Transaction entered into in
compliance with this paragraph being an Unrestricted Sale
and Lease-Back Transaction); or
|
|
|
(iii)
|
any Sale and Lease-Back Transaction if the Company or such
Restricted Subsidiary shall apply or cause to be applied, in the
case of such sale or transfer for cash, an amount equal to the
greater of the fair market value of the Principal Property sold
or transferred and leased back pursuant to such Sale and
Lease-Back Transaction or the net proceeds of such Sale and
Lease-Back Transaction and, in the case of such sale or transfer
otherwise than for cash, an amount equal to the fair market
value of the Principal Property sold or transferred and leased
back pursuant to such Sale and Lease-Back Transaction, to
(a) the retirement (other than any mandatory retirement),
within 180 days after the effective date of such Sale and
Lease-Back Transaction, of Indebtedness of the Company (which
may but need not include any Debt Securities) ranking on a
parity with, or prior to, such Debt Securities and owing to a
Person other than the Company or any Affiliate of the Company,
or (b) the purchase, construction or improvement of real
property or personal property used by the Company or its
Restricted Subsidiaries in the ordinary course of business.
|
Modification
of the Trust Indenture
With certain exceptions, the Trust Indenture, the rights
and obligations of the Company and the rights of the holders of
a particular series of Debt Securities may be modified by the
Company with the consent of the holders of not less than a
majority in aggregate principal amount of such series of Debt
Securities or a majority in principal amount of such series
voted at a duly constituted meeting; but no such modification
may be made which would: (i) reduce in any manner the
amount of, or change the currency of payment of, or delay the
time of any payments (whether of principal, premium, interest or
otherwise); (ii) change the definition of or the manner of
calculating amounts (including any change in the applicable rate
or rates of interest) to which any holder is entitled; or
(iii) reduce the above-stated percentage of Debt Securities
of such series, in each case without the consent of the holder
of each Debt Security of such series so affected or the consent
of 100% of the principal amount of such the Debt Securities of
such series voted at a duly constituted meeting.
Events of
Default
The Trust Indenture provides that any one or more of the
following events shall constitute an event of default with
respect to any series of Debt Securities thereunder: (i) a
default in the payment by the Company of the principal of (or
premium, if any, on) any Debt Securities of such series when the
same becomes due and payable at maturity, upon acceleration,
redemption or otherwise, or in any obligation to repurchase Debt
Securities of such series when required pursuant to the
Indenture; (ii) a default in the payment by the Company of
interest on any Debt Securities of such series when the same
becomes due and payable, and such default continues for a period
of 30 days; (iii) default by the Company in the
performance of or breach of any other covenant or agreement of
the Company with respect to such series of Debt Securities and
such default or breach continues for a period of 60 days
after written notice to the Company by the Trustee or the
holders of 25% or more in aggregate principal amount of the
outstanding Debt Securities of such series; (iv) if any
representation or warranty made by the Company in relation to a
series of Debt Securities was incorrect in any material respect
when made and, if it is capable of being corrected, such
misrepresentation is not corrected within 60 days after
written notice to the Company by the Trustee or the holders of
25% or more in aggregate principal amount of the outstanding
Debt Securities of such series; (v) any failure by the
Company or any Subsidiary to pay when due or within any
applicable grace period, any payment of Indebtedness of the
Company or any Subsidiary in an aggregate principal
8
amount in excess of US$75 million (or its equivalent in any
other currency or currencies), or any default occurs in respect
of any Indebtedness of the Company or any Subsidiary in respect
of any series of Debt Securities having an aggregate principal
amount exceeding US$75 million (or its equivalent in any
other currency or currencies) after the expiration of any
applicable grace period, if such default has resulted in such
Indebtedness in excess of such aggregate principal amount
becoming due prior to its stated maturity; (vi) a distress,
attachment, execution or other similar legal process for any
amount exceeding US$75 million (or its equivalent in any
other currency or currencies) is levied or enforced against any
part of the Property of the Company or any Subsidiary and is not
paid out, satisfied or withdrawn within 60 days of the date
of such levy or enforcement; or (vii) certain events of
bankruptcy, insolvency or reorganization of the Company or any
Subsidiary. The Company is required to file with the Trustee an
annual officers certificate as to the absence of certain
defaults under the Trust Indenture.
The Trust Indenture provides that if an event of default
(other than an event of default specified in clause
(vii) above in relation to the Company) shall occur and be
continuing with respect to a series of Debt Securities issued
thereunder, the Trustee may in its discretion and shall upon
request of the holders of not less than 25% in principal amount
of the outstanding Debt Securities of such series declare the
principal of, together with accrued interest on, all Debt
Securities of such series to be due and payable. In certain
cases, the holders of a majority in aggregate principal amount
of such series of Debt Securities or a majority in principal
amount of such series voted at a duly constituted meeting may on
behalf of the holders of all such Debt Securities waive any past
default or event of default and rescind and annul any such
declaration and its consequences.
The Trust Indenture further provides that if an event of
default specified in clause (vii) above in relation to the
Company occurs, the principal of and any accrued interest on the
Debt Securities then outstanding shall become immediately due
and payable; provided however that at any time after an
automatic acceleration with respect to the Debt Securities has
been made, the holders of a majority in aggregate principal
amount of such series of Debt Securities or a majority in
principal amount of such series voted at a duly constituted
meeting may, under certain circumstances, rescind and annul such
acceleration and its consequences.
The Trust Indenture contains a provision entitling the
Trustee, subject to its duty during a default to act with the
required standard of care, to be indemnified by the holders of
Debt Securities of such series before proceeding to exercise any
right or power under the Trust Indenture at the request of
such holders. The Trust Indenture provides that no holder
of Debt Securities of any series may pursue a remedy with
respect to the Trust Indenture except in the case of
failure of the Trustee to act.
Defeasance
Defeasance
of Certain Obligations
If the supplement to the Trust Indenture provides, the
Company may elect, with respect to any series of Debt
Securities, either to be discharged from its obligations or to
be released from its obligations to comply with the terms,
provisions or conditions relating to the negative pledge, the
restriction on Sale and Lease-Back Transactions, the
restrictions on amalgamations described below, any other
covenants or any event of default (other than its covenant to
maintain its existence and pay the principal, (premium, if any),
interest and other amounts on such series of Debt Securities).
Following such election, the Company will be so discharged,
provided: (i) the Company has, at least 91 days prior
to such discharge becoming effective, irrevocably deposited with
the Trustee, as specific security pledged for, and dedicated
solely to, the due payment and ultimate satisfaction of all of
its obligations under the Indenture with respect to the Debt
Securities of the series affected, (a) funds in the
currency or currencies in which such Debt Securities are
payable, and/or (b) an amount of direct obligations of, or
obligations the payment of principal of and interest, if any, on
which are fully guaranteed by, the government that issued the
currency or currencies in which Debt Securities of such series
are payable, and that are not subject to prepayment, redemption
or call, as will together with the predetermined and certain
income to accrue thereon without consideration of any
reinvestment thereof, be sufficient (in the case of such
obligations, through the payment of interest and principal
thereunder) to pay (x) the principal of (and premium, if
any) and interest and other amounts on the outstanding Debt
Securities of the particular series on their stated due dates or
maturity, as the case may be, and (y) any mandatory
prepayments on the day on which such prepayments are due and
payable; (ii) the Company shall have delivered to the
Trustee an opinion of counsel to the effect that the holders of
the Debt Securities affected will not recognize income, gain or
loss for Canadian federal income tax purposes as a result of
such defeasance in respect of the Companys obligations and
will be subject to Canadian federal income tax on the same basis
as if such defeasance had
9
not occurred; (iii) such deposit will not result in a
breach or violation of, or constitute a default under, the
Trust Indenture or any other material agreement or
instrument to which the Company is a party or by which it is
bound; (iv) no event of default with respect to the Debt
Securities of such series or event that, with notice or lapse of
time, would become such an event of default shall have occurred
and be continuing on the date of such deposit; (v) if the
Debt Securities affected are listed on any stock exchange or
securities exchange, the Company shall have delivered to the
Trustee an opinion of counsel to the effect that such deposit
and defeasance will not cause such Debt Securities to be
delisted; and (vi) the Company shall have delivered to the
Trustee an officers certificate and an opinion of counsel,
each stating that all conditions precedent to the defeasance
have been satisfied.
Other
Defeasance Arrangements
If so described in the Prospectus Supplement related to Debt
Securities of a specific series, the Company may enter into
certain other arrangements providing for the due payment and
ultimate satisfaction of its obligations with respect to such
series of Debt Securities by the deposit with the Trustee of
funds or obligations of the type referred to under
Defeasance of Certain Obligations. The
Prospectus Supplement will more fully describe the provisions,
if any, relating thereto.
Amalgamation,
Consolidation, Conveyance, Transfer or Lease
The Trust Indenture provides that the Company will not
consolidate, merge or amalgamate with any other Person or effect
any conveyance, sale, transfer or lease of its Property
substantially as an entirety, unless, in such case: (i) the
Person formed by such consolidation or amalgamation or with
which the Company is merged (or the Person that leases or that
acquires by conveyance, sale or transfer the Property of the
Company substantially as an entirety) (such Person being
referred to as the Successor Corporation) is a
corporation organized and validly existing under the laws of
Canada or any province thereof; (ii) the Successor
Corporation shall expressly, by supplemental indenture, assume
and become bound by the obligations of the Company under the
terms of the Indenture; (iii) after giving effect to, such
transaction, no default or event of default shall have occurred
and be continuing under the Trust Indenture or in respect
of the Debt Securities of any series; and (iv) the
Successor Corporation delivers to the Trustee an officers
certificate and legal opinion confirming that the foregoing
conditions have been met.
Governing
Law
The Trust Indenture is governed by, and construed in
accordance with, the laws of the Province of Ontario.
Certain
Definitions
Affiliate means, with respect to any Person,
any other Person that directly, or indirectly through one or
more intermediaries, controls, or is controlled by, or is under
common control with, such Person.
Attributable Debt shall mean, in respect of a
Sale and Lease-Back Transaction, at the time of determination,
the Capital Lease Obligations under the Capital Lease resulting
from such Sale and Lease-Back Transaction as reflected on the
consolidated balance sheet of the Company. Attributable Debt may
be reduced by the present value of the rental obligations,
calculated on the same basis that any sublessee has for all or
part of the same property.
Capital Lease means a lease that is required
to be capitalized for financial reporting purposes in accordance
with Canadian generally accepted accounting principles.
Capital Lease Obligations means indebtedness
represented by obligations under a Capital Lease. The amount of
indebtedness will be the capitalized amount of the obligations
determined in accordance with Canadian generally accepted
accounting principles consistently applied.
Closing Date means the date on which the Debt
Securities are issued.
Consolidated Net Tangible Assets means the
consolidated total assets of TELUS and its Subsidiaries as
reflected in TELUS most recent consolidated balance sheet
preceding the date of determination prepared in accordance with
Canadian generally accepted accounting principles consistently
applied, less (a) current liabilities, excluding the amount
of those which are by their terms extendable or renewable at the
option of the obligor to a date more than 12 months after
the date as of which the amount is being determined and current
maturities of long-term debt and Capital Lease
10
Obligations, and (b) goodwill, tradenames, trademarks,
patents, minority interests of others, unamortized debt discount
and expense and other similar intangible assets, excluding any
investments in permits, licenses and the subscriber base.
Indebtedness means, with respect to any
Person, (without duplication) (a) any liability of such
Person (1) for borrowed money, or under any reimbursement
obligation relating to a letter of credit, or (2) evidenced
by a bond, note, debenture or similar instrument (including a
purchase money obligation arising in connection with the
acquisition of any businesses, properties or assets of any kind,
other than a trade payable or a current liability arising in the
ordinary course of business), or (3) for the payment of
Capital Lease Obligations; (b) any liability of others
described in the preceding clause (a) that the Person has
guaranteed or that is otherwise its legal liability;
(c) any amendment, supplement, modification, deferral,
renewal, extension or refunding of any liability of the types
referred to in clauses (a) and (b) above; and
(d) in the case of any Restricted Subsidiary, the aggregate
amount at which any preference shares of such Restricted
Subsidiary are redeemable or retractable at the option of the
holder (excluding any such preference shares that are owned by
the Company or any Restricted Subsidiary).
Lien means any mortgage, pledge, lien,
security interest, charge or other encumbrance or preferential
arrangement (including any conditional sale or other title
retention agreement or lease in the nature thereof other than a
title retention agreement in connection with the purchase of
goods in the ordinary course of business which is outstanding
for not more than 90 days).
Person means any natural person, corporation,
firm, partnership, joint venture or other unincorporated
association, trust, government or governmental authority and
pronouns have a similar extended meaning.
Principal Property means at any time any
Property which has a fair market value or a book value in excess
of US$5 million (or its equivalent in any other currency or
currencies).
Property means any asset, revenue or any
other property or property right or interest, whether tangible
or intangible, real or personal, including, without limitation,
any right to receive income.
Restricted Subsidiary means (a) TELUS
Communications Inc. and (b) at any time any other
Subsidiary of TELUS, if at the end of the most recent fiscal
quarter for which the Company has issued its financial
statements, the total assets of such Subsidiary exceeds 10% of
consolidated assets of TELUS and its Subsidiaries, determined in
accordance with Canadian generally accepted accounting
principles consistently applied, provided that Restricted
Subsidiary shall not include any Subsidiary that is principally
engaged in the wireless business or TELUS Québec Inc.
Sale and Lease-Back Transaction means any
transaction or series of related transactions pursuant to which
the Company or any Restricted Subsidiary sells or transfers any
Principal Property, or any Property which together with any
other Property subject to the same transaction or series of
related transactions would in the aggregate constitute a
Principal Property, of the Company or such Restricted Subsidiary
to any Person and leases back such Principal Property (or other
Properties) by way of a Capital Lease Obligation but does not
include (a) any Sale and Lease-Back Transaction between the
Company and its Restricted Subsidiaries or between Restricted
Subsidiaries, or (b) any Sale and Lease-Back Transaction
where the term of the lease back is less than three years.
Subsidiary means any company or other
business entity which the Company owns or controls (either
directly or through one or more other Subsidiaries) more than
50% of the issued share capital or other ownership interest, in
each case having ordinary voting power to elect directors,
managers or trustees of such company or other business entity
(whether or not capital stock or other ownership interest or any
other class or classes shall or might have voting power upon the
occurrence of any contingency).
DESCRIPTION
OF SHARE CAPITAL
General
The following sets forth the terms and provisions of the
existing capital of the Company. The particular terms and
provisions of the Equity Securities offered by a Prospectus
Supplement and the extent to which these general terms and
provisions apply will be described in such Prospectus
Supplement. The Company is authorized under its Notice of
Articles to issue up to 1,000,000,000 shares of each class
of first preferred shares (the First Preferred
Shares), second preferred shares (the Second
Preferred Shares), Non-Voting Shares or Common Shares.
Certain of the rights and attributes of each class are described
below.
11
First
Preferred Shares
Shares Issuable
in Series
The First Preferred Shares may be issued at any time or from
time to time in one or more series. Before any shares of a
series are issued, the Board of Directors of the Company shall
fix the number of shares that will form such series and shall,
subject to the limitations set out in the articles of the
Company, determine the designation, rights, privileges,
restrictions and conditions to be attached to the First
Preferred Shares of such series, except that no series shall be
granted the right to vote at a general meeting of the
shareholders of the Company or the right to be convertible or
exchangeable for Common Shares, directly or indirectly.
Priority
The First Preferred Shares of each series shall rank on a parity
with the First Preferred Shares of every other series with
respect to dividends and return of capital and shall be entitled
to a preference over the Second Preferred Shares and the Common
Shares and Non-Voting Shares and over any other shares ranking
junior to the First Preferred Shares with respect to priority in
payment of dividends and in the distribution of assets in the
event of liquidation, dissolution or
winding-up
of the Company, whether voluntary or involuntary, or any other
distribution of the assets of the Company among its shareholders
for the purpose of
winding-up
its affairs.
Voting
Rights
Except as required by law, holders of the First Preferred Shares
as a class shall not be entitled to receive notice of, to attend
or to vote at any meeting of the shareholders of the Company,
provided that the rights, privileges, restrictions and
conditions attached to the First Preferred Shares as a class may
be added to, changed or removed only with the approval of the
holders of the First Preferred Shares given in such manner as
may then be required by law, subject to a minimum requirement
that such approval be given by resolution signed by the holders
of not less than two-thirds of the First Preferred Shares then
outstanding, or passed by an affirmative vote of at least
two-thirds of the votes cast at a meeting of the holders of the
First Preferred Shares duly called for that purpose.
Second
Preferred Shares
Shares Issuable
in Series
The Second Preferred Shares may be issued at any time or from
time to time in one or more series. Before any shares of a
series are issued, the Board of Directors of the Company shall
fix the number of shares that will form such series and shall,
subject to the limitations set out in the articles of the
Company, determine the designation, rights, privileges,
restrictions and conditions to be attached to the Second
Preferred Shares of such series, except that no series shall be
granted the right to vote at a general meeting of the
shareholders of the Company or the right to be convertible or
exchangeable for Common Shares, directly or indirectly.
Priority
The Second Preferred Shares of each series shall rank on a
parity with the Second Preferred Shares of every other series
with respect to dividends and return of capital and shall,
subject to the prior rights of the holders of the First
Preferred Shares, be entitled to a preference over the Common
Shares and the Non-Voting Shares and over any other shares
ranking junior to the Second Preferred Shares with respect to
priority in payment of dividends and in the distribution of
assets in the event of liquidation, dissolution or
winding-up
of the Company, whether voluntary or involuntary, or any other
distribution of the assets of the Company among its shareholders
for the purpose of
winding-up
its affairs.
Voting
Rights
Except as required by law, holders of the Second Preferred
Shares as a class shall not be entitled to receive notice of, to
attend or to vote at any meeting of the shareholders of the
Company, provided that the rights, privileges, restrictions and
conditions attached to the Second Preferred Shares as a class
may be added to, changed or removed only with the approval of
the holders of the Second Preferred Shares given in such manner
as may then be required by law, subject to a minimum
12
requirement that such approval be given by resolution signed by
the holders of not less than two-thirds of the Second Preferred
Shares then outstanding, or passed by an affirmative vote of at
least two-thirds of the votes cast at a meeting of the holders
of the Second Preferred Shares duly called for that purpose.
Common
Shares and Non-Voting Shares
Priority
The holders of Common Shares and Non-Voting Shares shall be
entitled to participate equally with each other as to dividends
and the Company shall pay dividends thereon, as and when
declared by the Board of Directors of the Company out of monies
properly applicable to the payment of dividends, in amounts per
share and at the same time on all such Common Shares and
Non-Voting Shares at the time outstanding as the Board of
Directors of the Company may from time to time determine. In the
event of the liquidation, dissolution or
winding-up
of the Company or other distribution of assets of the Company
among its shareholders for the purpose of
winding-up
its affairs, all the property and assets of the Company which
remain after payment to the holders of any shares ranking in
priority to the Common Shares and Non-Voting Shares in respect
of payment upon liquidation, dissolution or
winding-up
of all amounts attributed and properly payable to such holders
of such other shares in the event of such liquidation,
dissolution or
winding-up
or distribution, shall be paid and distributed equally, share
for share, to the holders of the Common Shares and the
Non-Voting Shares, without preference or distinction.
Voting
Rights
The holders of the Common Shares shall be entitled to receive
notice of and to attend (in person or by proxy) and be heard at
all general meetings of the shareholders of the Company (other
than separate meetings of the holders of shares of any other
class of shares of the Company or any other series of shares of
such other class of shares) and to vote at all such general
meetings with each holder of Common Shares being entitled to one
vote per Common Share held at all such meetings. The holders of
Non-Voting Shares shall be entitled to receive notice of and to
attend (in person or by proxy) and be heard at all general
meetings of the shareholders of the Company (other than at
separate meetings of the holders of shares of any other class of
shares of the Company or of shares of any other series of shares
of any such other class of shares other than the Common Shares)
and shall be entitled to receive all notices of meetings,
information circulars and other written information from the
Company that the holders of Common Shares are entitled to
receive from the Company but not to vote at such general
meetings, unless otherwise required by law.
Anti-Dilution
Neither the Common Shares nor the Non-Voting Shares shall be
subdivided, consolidated, reclassified or otherwise changed
unless contemporaneously therewith the other class is
subdivided, consolidated, reclassified or otherwise changed in
the same proportion and in the same manner.
Non-Voting
Share Conversion Rights
In the event an offer is made to purchase Common Shares that
(i) must, by reason of applicable securities legislation or
the requirements of a stock exchange on which the Common Shares
are listed, be made to all or substantially all of the holders
of Common Shares who are in a province of Canada to which the
requirement applies, and (ii) is not made concurrently with
an offer to purchase Non-Voting Shares that is identical to the
offer to purchase Common Shares in terms of price per share and
percentage of outstanding shares to be taken up exclusive of
shares owned immediately prior to the offer by the Offeror (as
defined in the articles of the Company), and in all other
material respects, and that has no condition attached thereto
other than the right not to take up and pay for shares tendered
if no shares are purchased pursuant to the offer for Common
Shares, then each outstanding Non-Voting Share shall be
convertible into one fully paid and non-assessable Common Share
at the option of the holder thereof exercisable during the
period commencing on the eighth day after the date on which the
offer to purchase Common Shares was made or deemed to be made
and expiring on the expiry date of such offer.
If all of the Telecommunications Regulations, the
Radiocommunication Regulations and the Broadcasting Direction
(each as defined below) are changed so that there is no
restriction on any non-Canadians (as defined in the
Telecommunications Regulations or the Broadcasting Direction, as
applicable) holding Common Shares in the Company and no
requirement that Canadians (as defined in the Radiocommunication
Regulations) hold Common Shares in the
13
Company, a holder of one or more Non-Voting Shares shall have
the right, at his or her option, at any time after the date of
the last to change of the Telecommunications Regulations, the
Radiocommunication Regulations and the Broadcasting Direction;
and prior to the closing of business 90 days thereafter
(the Regulatory Conversion Period) to convert any
one or more of such Non-Voting Shares into Common Shares on a
one-for-one
basis. If all of the Telecommunications Regulations, the
Radiocommunication Regulations and the Broadcasting Direction
are changed so that there is no restriction on any non-Canadians
(as defined in the Telecommunications Regulations and the
Broadcasting Direction, as applicable) holding Common Shares in
the Company and no requirement that Canadians (as defined in the
Radiocommunication Regulations) hold Common Shares in the
Company and following the Regulatory Conversion Period there are
Non-Voting Shares still outstanding, all holders of Non-Voting
Shares shall be deemed to have exercised their right to convert
the Non-Voting Shares held by them into Common Shares upon
receipt by all of the holders of written notice by the Company
stating that the Company is requiring all holders to convert
their Non-Voting Shares to Common Shares on the date specified
in such notice. Telecommunications Regulations mean
the Canadian Telecommunication Common Carrier Ownership and
Control Regulations made pursuant to the Telecommunications
Act (Canada); Radiocommunication Regulations
mean the Regulations respecting Radiocommunications, Radio
Authorizations, Exemptions from Authorizations and the Operation
of Radio Apparatus, Radio-Sensitive Equipment and Interface
Causing Equipment, P.C. 1996 1679 5 November,
1996, as amended or replaced from time to time, whether by
statute, regulation, direction or by any other form of
legislative instrument, and includes any licences under the
Radiocommunication Act (Canada) held by entities
controlled (as defined in the foregoing Regulations) by the
Company; and Broadcasting Direction means the
Direction to the Canadian Radio-television and
Telecommunications Commission (Ineligibility of Non-Canadians)
P.C. 1997 486 8 April 1997, as amended from
time to time and any replacement direction or regulation under
the Broadcasting Act (Canada) or any other form of
legislative instrument, with respect thereto.
Common
Share Conversion Right
The Company shall provide notice to each holder of Common Shares
at least 10 days before the record date in respect of each
general meeting of shareholders of the Company at which the
holders of the Non-Voting Shares will be entitled to vote as a
class. In such event and to the extent that, after taking into
account the conversion, the class of persons, each of whom is a
non-Canadian as defined in the Telecommunications Regulations or
the Broadcasting Direction, or is not a Canadian as defined in
the Radiocommunication Regulations (the Constrained
Class), would continue to hold no more than the maximum
number of Common Shares that may be owned and controlled by
persons in the Constrained Class in accordance with the
Telecommunications Regulations, the Radiocommunication
Regulations or the Broadcasting Directions, whichever is the
lowest so that, when added to all other voting shares (as
defined in the Telecommunications Regulations, the
Radiocommunication Regulations or the Broadcasting Direction, as
the case may be) owned or controlled by the Constrained Class,
the Company will be and will continue to be a qualified
corporation as defined in the Telecommunications
Regulations, a corporation that is Canadian (as defined in the
Radiocommunication Regulations) that controls (as defined in the
Radiocommunication Regulations) a person or entity that holds
licences under the Radiocommunication Act (Canada) and a
corporation that is qualified under the Broadcasting Direction
to be the parent of a corporation that is a qualified
corporation as defined in the Broadcasting Direction, each
outstanding Common Share shall be convertible into one
Non-Voting Share on a
one-for-one
basis.
Ownership
and Voting Restrictions
Non-Canadian shareholders shall not beneficially own or control,
other than by way of security only, more than
331/3%
(or such other percentage as may then be prescribed by the
Telecommunications Regulations, the Radiocommunication
Regulations or the Broadcasting Directions, whichever is the
lowest percentage, as the percentage of voting shares that may
be beneficially owned or controlled, by non-Canadians, in order
for a corporation to be a qualified corporation as
defined in the Telecommunications Regulations, a corporation
that is Canadian (as defined in the Radiocommunication
Regulations) that controls (as defined in the Radiocommunication
Regulations) a person or entity that holds licences under the
Radiocommunication Act (Canada) and a corporation that is
qualified under the Broadcasting Direction to be the parent of a
corporation that is a qualified corporation as
defined in the Broadcasting Direction, provided that if no such
percentage is prescribed the relevant percentage shall be deemed
to be 100%) (the Restricted Percentage) of the
issued and outstanding Common Shares of the Company (the
Non-Canadian Share Constraint). In the event that it
appears from the central securities register of the Company
that, or in the event of a Directors determination (as
provided for in the articles of the Company) that there is a
contravention of the Non-Canadian Share Constraint: (a) the
Company may pursuant to a Directors determination make a
public announcement, whether by
14
press release, newspaper advertisements or otherwise, reasonably
expected to inform the markets in which voting shares are traded
of the contravention; and (b) the Company may refuse to
(i) accept any subscription for voting shares from any
non-Canadian, (ii) issue any voting shares to any
non-Canadian, (iii) register or otherwise recognize the
transfer of any voting shares from any Canadian to any
non-Canadian, or (iv) purchase or otherwise acquire any
voting shares, except as provided in the articles of the Company.
In the event of a Directors determination that there is a
contravention of the Non-Canadian Share Constraint and that to
do so would be practicable and would not be unfairly prejudicial
to, and would not unfairly disregard the interests of, persons
beneficially owning or controlling voting shares who are
non-Canadians, the Company shall send a disposition notice to
the registered holders of such of those voting shares as shall
be chosen on the basis of inverse order of registration of all
non-Canadians. The Company may, by Directors
determination, suspend all rights of a shareholder to vote that
would otherwise be attached to any voting shares beneficially
owned, or controlled, by non-Canadians so that the proportion of
the voting shares beneficially owned, or controlled, or
considered by the Telecommunications Regulations, the
Radiocommunication Regulations or the Broadcasting Direction to
be beneficially owned, or controlled, by non-Canadians and with
respect to which voting rights are not suspended is reduced to
not more than the Restricted Percentage of the total issued and
outstanding voting shares of the Company. Any disposition notice
required to be sent to a registered holder of shares pursuant to
the foregoing shall, among other things: (a) specify a
date, which shall not be less than 60 days, after the date
of the disposition notice, by which the excess voting shares are
to be sold or otherwise disposed of or, if the Directors
determine it to be in the interest of the Company to permit a
conversion, converted into Non-Voting Shares; and (b) state
that unless (i) the registered holder either sells or
otherwise disposes of or converts the excess voting shares into
Non-Voting Shares by the date specified in the disposition
notice on a basis that does not result in any contravention of
the Non-Canadian Share Constraint and provides to the Company
written evidence satisfactory to the Company of such sale, other
disposition or conversion, or (ii) provides written
evidence satisfactory to the Company that no such sale, other
disposition or conversion of excess voting shares is required,
such default shall result in the consequence of suspension of
voting rights and may result in a consequence of sale or
conversion or repurchase or redemption and the disposition
notice shall specify in reasonable detail the nature and timing
of those consequences.
TELUS
Rights Plan
TELUS adopted the Rights Plan in March 2000 and issued one right
(a Series A Right) in respect of each Common
Share outstanding as at such date and issued one right (a
Series B Right) in respect of each Non-Voting
Share outstanding as of such date. The Rights Plan has a term of
10 years subject to shareholder confirmation every three
years. The Rights Plan was amended and confirmed as amended by
the shareholders first in 2003 and again in 2005 and 2008. Each
Series A Right, other than those held by an Acquiring
Person (as defined in the Rights Plan) and certain of its
related parties, entitles the holder in certain circumstances
following the acquisition by an Acquiring Person of more than
20% of the voting shares of TELUS (otherwise than through the
Permitted Bid requirements of the Rights Plan) to
purchase from TELUS $320 worth of Common Shares for $160 (i.e.,
at a 50% discount). Each Series B Right, other than those
held by an Acquiring Person (as defined in the Rights Plan) and
certain of its related parties, entitles the holder in certain
circumstances following the acquisition by an Acquiring Person
of 20% or more of the voting shares of TELUS (otherwise than
through the Permitted Bid requirements of the Rights
Plan) to purchase from TELUS $320 worth of Non-Voting Shares for
$160 (i.e., at a 50% discount).
DESCRIPTION
OF WARRANTS
This section describes the general terms that will apply to any
warrants (the Warrants) for the purchase of Equity
Securities (the Equity Warrants) or for the purchase
of Debt Securities (the Debt Warrants).
Warrants may be offered separately or together with Equity
Securities or Debt Securities, as the case may be. Each series
of Warrants will be issued under a separate Warrant agreement to
be entered into between the Company and one or more banks or
trust companies acting as Warrant agent. The applicable
Prospectus Supplement will include details of the Warrant
agreements covering the Warrants being offered. The Warrant
agent will act solely as the agent of the Company and will not
assume a relationship of agency with any holders of Warrant
certificates or beneficial owners of Warrants. The specific
terms of the Warrants, and the extent to which the general terms
described in this section apply to those Warrants, will be set
forth in the applicable Prospectus Supplement.
15
Equity
Warrants
The particular terms of each issue of Equity Warrants will be
described in the related Prospectus Supplement. This description
will include, where applicable:
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(i)
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the designation and aggregate number of Equity Warrants;
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(ii)
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the price at which the Equity Warrants will be offered;
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(iii)
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the currency or currencies in which the Equity Warrants will be
offered;
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(iv)
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the designation and terms of the Equity Securities purchasable
upon exercise of the Equity Warrants;
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(v)
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the date on which the right to exercise the Equity Warrants will
commence and the date on which the right will expire;
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(vi)
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the number of Equity Securities that may be purchased upon
exercise of each Equity Warrant and the price at which and
currency or currencies in which that amount of securities may be
purchased upon exercise of each Equity Warrant;
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(vii)
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the designation and terms of any securities with which the
Equity Warrants will be offered, if any, and the number of the
Equity Warrants that will be offered with each security;
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(viii)
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the date or dates, if any, on or after which the Equity Warrants
and the related securities will be transferable separately;
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(ix)
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whether the Warrants are subject to redemption or call and, if
so, the terms of such redemption or call provisions;
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(x)
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material United States and Canadian tax consequences of owning
the Warrants; and
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(xi)
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any other material terms or conditions of the Warrants.
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Debt
Warrants
The particular terms of each issue of Debt Warrants will be
described in the related Prospectus Supplement. This description
will include, where applicable:
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(i)
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the designation and aggregate number of Debt Warrants;
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(ii)
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the price at which the Debt Warrants will be offered;
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(iii)
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the currency or currencies in which the Debt Warrants will be
offered;
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(iv)
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the aggregate principal amount, currency or currencies,
denominations and terms of the series of Debt Securities that
may be purchased upon exercise of the Debt Warrants;
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(v)
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the designation and terms of any securities with which the Debt
Warrants are being offered, if any, and the number of the Debt
Warrants that will be offered with each security;
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(vi)
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the date or dates, if any, on or after which the Debt Warrants
and the related securities will be transferable separately;
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(vii)
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the principal amount of Debt Securities that may be purchased
upon exercise of each Debt Warrant and the price at which and
currency or currencies in which that principal amount of
securities may be purchased upon exercise of each Debt Warrant;
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(viii)
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the date on which the right to exercise the Debt Warrants will
commence and the date on which the right will expire;
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(ix)
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the minimum or maximum amount of Debt Warrants that may be
exercised at any one time;
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(x)
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whether the Warrants will be subject to redemption or call, and,
if so, the terms of such redemption or call provisions;
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(xi)
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material United States and Canadian tax consequences of owning
the Debt Warrants; and
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(xii)
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any other material terms or conditions of the Debt Warrants.
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16
DESCRIPTION
OF SHARE PURCHASE CONTRACTS
AND SHARE PURCHASE OR EQUITY UNITS
The Company may issue share purchase contracts, including
contracts obligating holders to purchase from the Company, and
the Company to sell to the holders, a specified number of Equity
Securities, at a future date or dates, or similar contracts
issued on a prepaid basis (in each case, Share
Purchase Contracts). The price per Equity Security and the
number of Equity Securities may be fixed at the time the Share
Purchase Contracts are issued or may be determined by reference
to a specific formula set forth in the Share Purchase Contracts.
The Share Purchase Contracts will require either the share
purchase price be paid at the time the Share Purchase Contracts
are issued or that payment be made at a specified future date.
The Share Purchase Contracts may be issued separately or as part
of units consisting of a Share Purchase Contract and Debt
Securities or obligations of third parties (including U.S.
treasury securities) (the Share Purchase or Equity
Units), and may, or may not serve as collateral for a
holders obligations. The Share Purchase Contracts may
require holders to secure their obligations thereunder in a
specified manner. The Share Purchase Contracts also may require
the Company to make periodic payments to the holders of the
Share Purchase Contracts or vice versa, and such payments
may be unsecured or refunded on some basis.
The applicable Prospectus Supplement will describe the terms of
the Share Purchase Contracts or Share Purchase or Equity Units.
The description in the Prospectus Supplement will not
necessarily be complete, and reference will be made to the Share
Purchase Contracts, and, if applicable, collateral, depositary
or custodial arrangements, relating to the Share Purchase
Contracts or Share Purchase or Equity Units. Material United
States and Canadian federal income tax considerations applicable
to the holders of the Share Purchase or Equity Units and the
Share Purchase Contracts will also be discussed in the
applicable Prospectus Supplement.
DENOMINATIONS,
REGISTRATION AND TRANSFER
The Securities will be issued in fully registered form without
coupons attached in either global or definitive form and in
denominations and integral multiples as set out in the
applicable Prospectus Supplement (unless otherwise provided with
respect to a particular series of Debt Securities pursuant to
the provisions of the Trust Indenture, as supplemented by a
supplemental indenture). Other than in the case of book-entry
only securities, Securities may be presented for registration of
transfer (with the form of transfer endorsed thereon duly
executed) in the city specified for such purpose at the office
of the registrar or transfer agent designated by the Company for
such purpose with respect to any issue of Securities referred to
in the Prospectus Supplement. No service charge will be made for
any transfer, conversion or exchange of the Securities but the
Company may require payment of a sum to cover any transfer tax
or other governmental charge payable in connection therewith.
Such transfer, conversion or exchange will be effected upon such
registrar or transfer agent being satisfied with the documents
of title and the identity of the Person making the request. If a
Prospectus Supplement refers to any registrar or transfer agent
designated by the Company with respect to any issue of
Securities, the Company may at any time rescind the designation
of any such registrar or transfer agent and appoint another in
its place or approve any change in the location through which
such registrar or transfer agent acts.
In the case of book-entry only securities, a global certificate
or certificates representing the Securities will be held by a
designated depository for its participants. The Securities must
be purchased or transferred through such participants, which
includes securities brokers and dealers, banks and trust
companies. The depository will establish and maintain book-entry
accounts for its participants acting on behalf of holders of the
Securities. The interests of such holders of Securities will be
represented by entries in the records maintained by the
participants. Holders of Securities issued in book-entry only
form will not be entitled to receive a certificate or other
instrument evidencing their ownership thereof, except in limited
circumstances. Each holder will receive a customer confirmation
of purchase from the participants from which the Securities are
purchased in accordance with the practices and procedures of
that participant.
RISK
FACTORS
Prospective investors in the Securities should consider
carefully the matters set forth in the section entitled
Risks and risk management in Managements
Discussion and Analysis of financial results in respect of the
Companys most recent annual audited financial statements
and in Managements Discussion and Analysis of financial
results in respect of the Companys unaudited interim
financial statements filed thereafter, each of which is being
incorporated by reference in this section.
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PLAN OF
DISTRIBUTION
The Company may sell the Securities to or through underwriters
or dealers, and also may sell Securities to one or more other
purchasers directly or through agents. Each Prospectus
Supplement will set forth the terms of the offering, including
the name or names of any underwriters or agents, the purchase
price or prices of the Securities and the proceeds to the
Company from the sale of the Securities.
The Securities may be sold, from time to time in one or more
transactions at a fixed price or prices which may be changed or
at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or at negotiated prices.
Underwriters, dealers and agents who participate in the
distribution of the Securities may be entitled under agreements
to be entered into with the Company to indemnification by the
Company against certain liabilities, including liabilities under
securities legislation, or to contribution with respect to
payments which such underwriters, dealers or agents may be
required to make in respect thereof. Such underwriters, dealers
and agents may be customers of, engage in transactions with, or
perform services for, the Company in the ordinary course of
business.
In connection with any offering of Securities, the underwriters
or agents may, subject to applicable law, over-allot or effect
transactions which stabilize or maintain the market price of the
Securities offered at a level above that which might otherwise
prevail in the open market. Such transactions, if commenced, may
be discontinued at any time.
LEGAL
MATTERS
Certain legal matters in connection with any offering hereunder
will be passed upon by Bennett Jones LLP, Toronto, Ontario and
by Skadden, Arps, Slate, Meagher & Flom LLP, New York,
New York for the Company. The partners and associates of such
law firms as a group beneficially own, directly or indirectly,
less than one percent of the outstanding securities of the
Company.
PURCHASERS
STATUTORY RIGHTS
Securities legislation in certain of the provinces of Canada
provides purchasers with the right to withdraw from an agreement
to purchase securities. This right may be exercised within two
business days after receipt or deemed receipt of a prospectus
and any amendment. In several of the provinces, the securities
legislation further provides a purchaser with remedies for
rescission or, in some jurisdictions, damages, if the prospectus
and any amendment contains a misrepresentation or is not
delivered to the purchaser, provided that the remedies for
rescission or damages are exercised by the purchaser within the
time limit prescribed by the securities legislation of the
purchasers province. The purchaser should refer to any
applicable provisions of the securities legislation of the
purchasers province for the particulars of these rights or
consult with a legal adviser. Rights and remedies also may be
available to purchasers under U.S. law; purchasers may wish to
consult with a U.S. lawyer for particulars of these rights
DOCUMENTS
FILED AS PART OF THE REGISTRATION STATEMENT
The following documents have been or will be filed with the SEC
as part of the Registration Statement of which this Prospectus
forms a part: the documents referred to under Documents
Incorporated by Reference; consent of Deloitte &
Touche LLP;
Form F-X
of the Company;
Form F-X
of Computershare Trust Company of Canada; powers of
attorney from directors and officers of the Company; and the
Indenture.
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