Back to Investor Relations

BCE/Nortel Networks Plan of Arrangement Background Rights Plan Shareholders Letter Tax Information Calculator

Proposed BCE/Nortel Plan of Arrangement

BCE Inc. ("BCE") is Canada's largest communications company. Although Nortel Networks was founded as a wholly-owned subsidiary of BCE, over the years Nortel Networks has grown increasingly independent from BCE. As of February 29, 2000, BCE owned approximately 38% of the outstanding common shares of Nortel Networks. Nortel Networks' management is totally independent of BCE and only four of its 12 directors are also directors of BCE.

On January 26, 2000, BCE and Nortel Networks announced they had entered into an agreement to implement a Plan of Arrangement under which BCE would distribute an approximately 37 percent ownership interest (approximately 36% as of February 29, 2000) in Nortel Networks to BCE's shareholders.

Under the proposed Plan of Arrangement, a new publicly-traded Canadian company ("New Nortel") will be created which will own all of the common shares of and continue as Nortel Networks. The proposed Plan of Arrangement provides for what is referred to as a "butterfly" reorganization of BCE and the exchange of all Nortel Networks common shares for New Nortel common shares. In essence, on the effective date of the Arrangement, BCE common shareholders will have their BCE common shares divided into two classes of shares, one class representing the value of the Nortel Networks investment that is to be indirectly distributed to the BCE common shareholders and the other representing the net value of all of BCE's non-Nortel Networks assets plus the value of the Nortel Networks investment that is to be retained by BCE. Through a complex series of exchanges, the shares representing the value of the Nortel Networks investment to be distributed will ultimately be transferred to New Nortel and BCE common shareholders will receive approximately 0.78 of a New Nortel common share for each BCE common share held. BCE common shareholders will also continue to own a BCE common share, which will represent the value of an interest in BCE's remaining assets.

Also as part of the Arrangement, on the effective date of the Arrangement Nortel Networks common shareholders will exchange their existing Nortel Networks common shares on a share-for-share basis for New Nortel common shares. As a result, all Nortel Networks common shares will be owned by New Nortel. New Nortel's name will be changed to Nortel Networks Corporation (in French Corporation Nortel Networks) and Nortel Networks' name will be changed to Nortel Networks Limited (in French Corporation Nortel Networks Limitée). Finally, New Nortel will effect a two-for-one stock split at the close of business on the fourth trading day following the effective date of the Arrangement, expected to be on or about May 5, 2000.

The share exchange will not be taxable to Canadian or United States Nortel Networks common shareholders who hold their shares as capital property. The distribution of New Nortel common shares to BCE common shareholders generally will not be taxable to Canadian residents who hold their shares as capital property but will be a taxable dividend to United States taxpayers. The transaction is subject to regulatory, shareholder and court approval. Nortel Networks and BCE expect the Plan of Arrangement to become effective on or about May 1, 2000.