P. Schoenfeld Asset Management Issues White Paper On MetroPCS/T-Mobile Transaction

Mar 18, 2013, 13:51 ET from P. Schoenfeld Asset Management LP (PSAM)

NEW YORK, March 18, 2013 /PRNewswire/ -- P. Schoenfeld Asset Management LP ("PSAM") issued a white paper today that provides detailed analysis of the proposed MetroPCS Communications, Inc. ("PCS") and T-Mobile USA, Inc. ("T-Mobile") transaction (the "Proposed T-Mobile Transaction"), and outlines for all MetroPCS shareholders an overwhelming case for why it is in the best interests of PCS shareholders to vote against the Proposed T-Mobile Transaction.  PSAM's white paper will be filed with the Securities and Exchange Commission ("SEC") later today.

Following are excerpts from the PSAM white paper.  To read PSAM's white paper in its entirety and a more detailed description of the arguments below, please go to the following link: www.innisfreema.com/pcs.


A Standalone PCS is a viable and attractive alternative to the Proposed T-Mobile Transaction

  • The standalone alternative yields superior value to PCS shareholders, even without a revised offer from Deutsche Telekom AG ("DT") or another buyer surfacing.  Standalone does not mean standstill.
  • Analysts agree that PCS is worth more as a standalone company than combined with T-Mobile.

Equity split does not reflect PCS's strong recent performance and does not provide the value PCS shareholders deserve

  • The proposed equity split, allocating 26% of the proposed combined PCS/T-Mobile post transaction (the "Combined Company") to PCS shareholders, is patently unfair to PCS shareholders, does not reflect recent exceptionally strong performance by PCS, and is based on stale and overly conservative PCS projections, according to PCS's own proxy statement; and
  • Limited discussions occurred with third parties and potential acquirors over an extended period of time, and no coordinated process has occurred in the present M&A, financing and industry environment to assure PCS shareholders that the Proposed T-Mobile Transaction maximizes PCS shareholder value.

Deal unfairly favors Deutsche Telekom, creates serious conflicts of interest and violates good corporate governance

  • The transaction unfairly favors DT, offering unequal downside protection with their $15 billion creditor position, 74% of the equity of the Combined Company, and control of the Combined Company's Board and management – representing, as a whole, serious conflicts of interest and violations of good corporate governance; and
  • The transaction process conducted by PCS was not designed to obtain the highest value for all PCS shareholders and the terms of the Proposed T-Mobile transaction do not provide any control premium to PCS shareholders – despite an unequivocal sale of control to DT.

$1.5 billion spectrum acquisition deduction charged to PCS is not appropriate

  • A $1.5 billion spectrum acquisition deduction charged to PCS is not appropriate or consistent for the contribution analysis, and no details have been provided by PCS regarding this significant capital expenditure.


Proposed capital structure of the Combined Company transfers value from PCS shareholders to DT and places excess risk on PCS shareholders

  • The proposed capital structure is neither appropriate nor fair to PCS shareholders. It transfers value from PCS shareholders to DT and places excess ongoing risk on PCS shareholders;
  • There are multiple hidden transfers of significant value to DT, including above market interest rates on the $15 billion of intercompany debt to be issued by the Combined Company to DT ("the "DT Notes"); and
  • A capital structure with no secured debt is not remotely optimal, is highly expensive and unfairly favors the Combined Company's largest creditor, DT.

Combined Company will be over leveraged

  • Significantly enhanced operating flexibility would result from less leverage and a market-based capital structure; and
  • The DT notes have onerous call provisions and a substantial make-whole premium on the Combined Company and, as a result, limit future refinancing options.

Tremendous lack of transparency regarding the Proposed T-Mobile Transaction

  • Among many other issues detailed in our analysis, there has been no clarity regarding the suggested $1.5 billion PCS spectrum investment and its impact on the equity split, the source and rationale for the synergies valued at $6-$7 billion, the identity of 8 of the 11 directors of the Combined Company Board post-closing, and various other material items; and
  • This pervasive lack of transparency places PCS shareholders at a significant disadvantage in objectively evaluating the merits of the transaction.


  • The value of PCS's spectrum portfolio and the alternative of operating as a mobile virtual network provide downside protection.

The market is clearly and strongly voting against the transaction and so should you

  • PCS's stock price is down more than 24% since the announcement of the proposed transaction on October 3, 2012, and is trading at a significant discount to the PCS standalone values presented by PCS and its own financial advisors. The market is clearly voting "AGAINST" the proposed T- Mobile transaction.

On March 12, 2013, P. Schoenfeld Asset Management LP, P. Schoenfeld Asset Management GP LLC and Peter M. Schoenfeld  (collectively, the "PSAM Group") filed with the Securities and Exchange Commission (the "SEC") a definitive proxy statement (the "Definitive Proxy Statement") relating to the solicitation of proxies by the PSAM Group from stockholders of MetroPCS Communications, Inc. ("MetroPCS") in connection with the special meeting of stockholders to be held on April 12, 2013 to vote upon matters relating to the proposed combination of MetroPCS with T-Mobile USA, Inc.   STOCKHOLDERS OF METROPCS ARE URGED TO READ THE DEFINITIVE PROXY STATEMENT AND OTHER DOCUMENTS FILED WITH THE SEC RELATING TO SUCH SOLICITATION CAREFULLY IN THEIR ENTIRETY BECAUSE THEY CONTAIN IMPORTANT INFORMATION, INCLUDING INFORMATION RELATING TO THE PARTICIPANTS IN SUCH SOLICITATION. The Definitive Proxy Statement and form of WHITE proxy card will be furnished to some or all of the stockholders of MetroPCS and will, along with other relevant documents filed with the SEC, be available free of charge at the SEC's website at http://www.sec.gov. In addition, the PSAM Group will provide copies of the Definitive Proxy Statement and accompanying WHITE proxy card without charge upon request.

About PSAM
P. Schoenfeld Asset Management LP (together with its affiliates, "PSAM") was founded by Peter M. Schoenfeld and has been providing investment advisory services since 1997.  PSAM invests on behalf of its clients in both equity and credit securities in global event driven opportunities, including: international consolidations, corporate restructurings, spin-offs, divestitures, and stressed and distressed credits.  PSAM has offices in New York and London, which are registered with the SEC and authorised and regulated by the FSA, respectively. 

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SOURCE P. Schoenfeld Asset Management LP (PSAM)