AT&T Sets Date for Wireless Spin-Off
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AT&T Corp.'s Board of Directors Friday voted to spin off AT&T Wireless as a separate independent company on July 9, 2001.
The company will redeem AT&T Wireless tracking shares and convert them into AT&T Wireless common stock on a one-for-one basis. The board also decided to issue a dividend of AT&T Wireless common stock to AT&T common stock shareholders of record on June 22. The dividend will be payable concurrently with the redemption.
The company said the special dividend will allow it to distribute the 1.16 billion shares of AT&T Wireless held by AT&T and allow it to complete the spin off. However, AT&T plans to hold onto about $3 billion of AT&T Wireless common stock for later disposition.
The company will distribute 1/3 of a share of AT&T Wireless for each AT&T common share outstanding, with the final ratio determined by the actual number of AT&T shares outstanding on the record date and the exact number of AT&T Wireless shares retained. AT&T said it currently has about 3.45 billion common shares outstanding.
After the tracking shares are exchanged and the AT&T Wireless shares distributed, AT&T shareholders will hold about 63 percent of AT&T Wireless' outstanding shares of common stock. The company sold more than $20 billion of AT&T Wireless tracking shares and tracking share equivalents to new investors as part of a public offering in April 2000 and to NTT DoCoMo in January 2001. Those shares, representing about 30 percent of the outstanding AT&T Wireless common stock shares, will also be redeemed.
The company said shareholders will receive whole shares of AT&T Wireless and cash payments for fractional shares. AT&T obtained a ruling from the IRS that the dividend to shareholders and the redemption of the tracking stock will qualify as tax-free for tax purposes, except in the case of cash exchanged for fractional shares.