SUMMARY

This summary highlights selected information contained in this proxy statement/prospectus and does not contain all the information that may be important to you. Mitel and Polycom urge you to read carefully this proxy statement/prospectus in its entirety, including the annexes. Additional, important information, which Mitel and Polycom also urge you to read, is contained in the documents incorporated by reference into this proxy statement/prospectus. See the section entitled “Where You Can Find More Information,” beginning on page 203 of this proxy statement/prospectus. Unless stated otherwise, all references in this proxy statement/prospectus to Mitel are to Mitel Networks Corporation, all references to Polycom are to Polycom, Inc., all references to Merger Sub are to Meteor Two, LLC, all references to “we,” “us” and “our” refer to Mitel and Polycom collectively, all references to the “combined company” are to Mitel Networks Corporation and its subsidiaries, including Polycom and its subsidiaries, following the completion of the merger, and all references to the merger agreement are to the Agreement and Plan of Merger, dated as of April 15, 2016 and as amended from time to time, by and among Polycom, Mitel and Merger Sub, a copy of which is attached as Annex A to this proxy statement/prospectus.

The Parties

Mitel Networks Corporation

Mitel is a Canadian corporation and a global provider of cloud, mobile and enterprise communications and collaboration solutions. Through its software product development, Mitel helps more than 60 million business end users, two million cloud communications end users, and more than 130 mobile service providers, including more than half of the top 20 mobile carriers in the world, seamlessly connect, collaborate and provide innovative solutions to their customers.

Mitel’s principal executive office is located at 350 Legget Drive, Ottawa, Ontario, Canada K2K 2W7, and its telephone number at that location is (613) 592-2122.

Additional information concerning Mitel is included in the Mitel reports incorporated by reference in this proxy statement/prospectus. See the section entitled “Where You Can Find More Information,” beginning on page 203 of this proxy statement/prospectus. Mitel’s common shares are listed on the NASDAQ, trading under the symbol “MITL,” and on the Toronto Stock Exchange, which is referred to as the TSX, trading under the symbol “MNW.”

Polycom, Inc.

Polycom is a California-based corporation and a global leader in helping organizations achieve new levels of teamwork, efficiency and productivity by unleashing the power of human collaboration. More than 400,000 companies and institutions worldwide defy distance with secure video, voice and content solutions from Polycom to increase productivity, speed time to market, provide better customer service, expand education and save lives. Together with Polycom’s global partner ecosystem, it provides flexible collaboration solutions for any environment that deliver a high-quality user experience, a broad multi-vendor interoperability and investment protection.

Polycom’s principal executive office is located at 6001 America Center Drive, San Jose, California 95002, and its telephone number at that location is (408) 586-6000.

Additional information concerning Polycom is included in the Polycom reports incorporated by reference in this proxy statement/prospectus. See the section entitled “Where You Can Find More Information,” beginning on page 203 of this proxy statement/prospectus. Polycom stock is listed on the NASDAQ, trading under the symbol “PLCM.”

 

Meteor Two, LLC

Merger Sub, a wholly owned subsidiary of Mitel, is a Delaware limited liability company that was formed on April 12, 2016 (originally as a Delaware corporation), for the purpose of effecting the merger. Merger Sub has not conducted any activities other than those incidental to its formation, its conversion from a corporation to a limited liability company, and the matters contemplated by the merger agreement. The principal executive office of Merger Sub is located at 5850  Granite Parkway, Suite 600, Plano, Texas 75024.

The Merger

On April 15, 2016, Mitel, Merger Sub and Polycom entered into the merger agreement, which provides that, subject to the terms and conditions of the merger agreement and in accordance with the DGCL, Merger Sub will merge with and into Polycom, with Polycom continuing as the surviving corporation and a wholly owned subsidiary of Mitel.

Consideration to be Received in the Merger by Polycom Stockholders

At the effective time, each share of Polycom stock issued and outstanding immediately prior to the effective time (other than shares of Polycom stock held by Polycom, Mitel or their respective subsidiaries and shares of Polycom stock with respect to which appraisal rights are properly demanded and not withdrawn under the DGCL) will be cancelled and converted into the right to receive the merger consideration, consisting of:

 

•

cash in an amount equal to $3.12, without interest; and

 

•

1.31 fully paid and non-assessable Mitel common shares.

No fractional Mitel common shares will be issued in the merger, and holders of Polycom stock will receive cash in lieu of any fractional Mitel common shares as described in the section entitled “The Merger Agreement—Fractional Shares,” beginning on page 130 of this proxy statement/prospectus.

Treatment of Polycom Stock Options and Other Stock-Based Awards

At the effective time, each outstanding Polycom stock option award will be cancelled in exchange for an amount in cash, without interest and subject to applicable tax withholdings, equal to the product of:

 

•

the excess of (1) the sum of (A) $3.12 plus the product of (B) 1.31 multiplied by the average of the volume weighted average price of a Mitel common share on the NASDAQ on each of the five consecutive trading days ending with the complete trading day immediately prior to the closing date of the merger, which is referred to as the Mitel average closing price and which sum is referred to as the per share cash value, over (2) the exercise price per share of Polycom stock underlying such Polycom stock option award multiplied by

 

•

the number of shares of Polycom stock underlying such Polycom stock option award.

At the effective time, each outstanding Polycom RSU award and Polycom performance share award that is vested immediately prior to the effective time, vests as a result of the consummation of the merger or is held by any non-employee member of the Polycom Board, referred to, collectively, as Polycom vested awards, will be cancelled in exchange for an amount in cash, without interest and subject to applicable tax withholdings, equal to the product of:

 

•

the per share cash value multiplied by

 

•

the number of shares of Polycom stock underlying such Polycom vested award.

 

Each outstanding Polycom RSU award that is not a Polycom vested award will be assumed by Mitel and converted into restricted share units of Mitel, which are referred to as adjusted RSU awards, representing the right to receive, on the same terms and conditions as were applicable under such Polycom RSU award, the number of Mitel common shares equal to the product of:

 

•

the number of shares of Polycom stock underlying a Polycom RSU award immediately prior to the effective time multiplied by

 

•

the quotient of (1) the per share cash value divided by (2) the Mitel average closing price, which quotient is referred to as the equity award exchange ratio,

with any fractional Mitel common shares rounded down to the nearest lower whole number of shares.

Each outstanding Polycom performance share award that is not a Polycom vested award will be assumed by Mitel and converted into performance shares of Mitel, which are referred to as adjusted performance share awards, representing the right to receive, on the same terms and conditions as were applicable under such Polycom performance share award, the number of Mitel common shares equal to the product of:

 

•

the number of shares of Polycom stock underlying such Polycom performance share award immediately prior to the effective time (which will be 100% of the target number of shares of Polycom stock set forth in the applicable award agreement governing the Polycom performance share award) multiplied by

 

•

the equity award exchange ratio,

with any fractional Mitel common shares rounded down to the nearest lower whole number of shares.

Prior to the effective time, each Polycom stock option award, Polycom RSU award and Polycom performance share award outstanding as of the business day immediately prior to the closing date of the merger that is held by a disqualified individual, including each of Polycom’s executive officers and directors, will be accelerated and cancelled in exchange for an amount in cash, without interest and subject to applicable tax withholdings, equal to the amount described above with respect to Polycom stock option awards and Polycom vested awards, with any Polycom performance share awards accelerated at 100% of the target number of shares set forth in the applicable Polycom performance share award. Such amounts will be paid on the business day immediately prior to the closing date of the merger.

For a more complete discussion of the treatment of Polycom stock options and other stock-based awards, see the section entitled “The Merger Agreement—Treatment of Polycom Stock Options and Other Stock-Based Awards,” beginning on page 133 of this proxy statement/prospectus. For further discussion of the treatment of Polycom stock options, restricted stock units and performance share awards held by directors and executive officers of Polycom, see the section entitled “The Merger—Interests of Directors and Executive Officers in the Merger,” beginning on page 96 of this proxy statement/prospectus.

Mitel Board Following Completion of the Merger

At the closing of the merger, Martha H. Bejar and Robert J. Frankenberg, members of the Polycom Board, are expected to be appointed to Mitel’s board of directors, which is referred to as the Mitel Board.

For a more complete discussion of the Mitel Board following completion of the merger, see the section entitled “The Merger—Governance of Mitel Following Completion of the Merger,” beginning on page 95 of this proxy statement/prospectus.

Headquarters

Upon completion of the merger, Mitel’s headquarters will remain in Ottawa, Ontario, Canada.

 

Recommendations of the Polycom Board

After careful consideration, the Polycom Board unanimously recommends that Polycom stockholders vote “FOR” the Merger proposal and “FOR” the Adjournment proposal.

For a more complete description of the Polycom Board’s reasons for the merger and the recommendation of the Polycom Board, see the section entitled “The Merger—Polycom Board’s Recommendations and Its Reasons for the Merger,” beginning on page 75 of this proxy statement/prospectus.

Opinion of Polycom’s Financial Advisor

Morgan Stanley & Co. LLC, referred to as Morgan Stanley, was retained by the Polycom Board to act as its financial advisor in connection with the merger. On April 14, 2016, Morgan Stanley rendered its oral opinion, which was subsequently confirmed in writing on the same date, to the Polycom Board to the effect that, as of such date, and based upon and subject to the assumptions made, procedures followed, matters considered and qualifications and limitations on the scope of review undertaken by Morgan Stanley as set forth in its written opinion, the consideration to be received by the holders of shares of Polycom stock pursuant to the merger agreement was fair from a financial point of view to such holders.

The full text of Morgan Stanley’s written opinion to the Polycom Board, dated April 14, 2016, which sets forth, among other things, the assumptions made, procedures followed, matters considered and qualifications and limitations on the scope of the review undertaken by Morgan Stanley in rendering its opinion, is attached to this proxy statement/prospectus as Annex B. The foregoing summary of Morgan Stanley’s opinion is qualified in its entirety by reference to the full text of the opinion. You are encouraged to read Morgan Stanley’s opinion, this section and the summary of Morgan Stanley’s opinion below carefully and in their entirety. Morgan Stanley’s opinion was for the benefit of the Polycom Board, in its capacity as such, and addressed only the fairness from a financial point of view of the consideration to be received by the holders of shares of Polycom stock pursuant to the merger agreement as of the date of the opinion and did not address any other aspects or implications of the merger. Morgan Stanley’s opinion was not intended to, and does not, constitute advice or a recommendation as to how Polycom’s stockholders or Mitel’s shareholders should vote at any stockholders’ or shareholders’ meeting, respectively, to be held in connection with the merger or take any other action with respect to the merger.

For a description of the opinion that the Polycom Board received from Morgan Stanley, see the section entitled “The Merger—Opinion of Polycom’s Financial Advisor,” beginning on page 79 of this proxy statement/prospectus.

Interests of Directors and Executive Officers in the Merger

Treatment of Equity Awards Held by Directors and Executive Officers of Polycom in the Merger

Prior to the effective time, each Polycom stock option award, Polycom RSU award and Polycom performance share award outstanding as of the business day immediately prior to the closing date of the merger that is held by a disqualified individual, including each of Polycom’s directors and executive officers, will be accelerated and cancelled in exchange for an amount in cash (without interest and subject to applicable tax withholdings), payable on the business day immediately prior to the closing date of the merger, determined as follows:

 

•

with regard to Polycom stock option awards: (1) the excess of (A) the sum of (x) $3.12 plus the product of (y) 1.31 multiplied by the average of the volume weighted average price of a Mitel common share on the NASDAQ on each of the five consecutive trading days ending with the complete trading day

 

immediately prior to the closing date of the merger, which is referred to as the Mitel average closing price and which sum is referred to as the per share cash value, over (B) the exercise price per share of Polycom stock underlying such Polycom stock option award multiplied by (2) the number of shares of Polycom stock underlying such Polycom stock option award.

 

•

with regard to Polycom RSU awards and Polycom performance share awards: (1) the per share cash value multiplied by (2) the number of shares of Polycom stock underlying such Polycom RSU award or Polycom performance share award, with any Polycom performance share awards accelerated at 100% of the target number of shares set forth in the applicable Polycom performance share award.

The vesting acceleration described above is expected to apply to each of the Polycom equity awards held by Polycom’s named executive officers and non-employee directors that are outstanding on the business day immediately before the closing date of the merger. All Polycom equity awards that otherwise remain outstanding as of the closing date of the merger will be (a) cashed out with respect to any Polycom stock option awards and any vested (but not yet settled) Polycom RSU awards and Polycom performance share awards, or (b) assumed by Mitel with respect to any other Polycom RSU awards and Polycom performance share awards, as specified in the merger agreement. With respect to any Polycom performance share awards to be assumed by Mitel, the number of shares subject to the outstanding awards to be assumed will be based on 100% of the target number of shares set forth in the applicable Polycom performance share award agreement, and the awards will be subject to time-based vesting but no longer will be subject to any performance vesting criteria.

Please also see the section entitled “The Merger—Interests of Directors and Executive Officers in the Merger—Equity Interests of Polycom’s Executive Officers and Non-Employee Directors,” beginning on page 102 of this proxy statement/prospectus, for further information regarding these equity awards.

Change of Control Severance Agreements for Polycom’s Executive Officers

Polycom has entered into a change of control severance agreement with each of its executive officers. Under the terms of each change of control severance agreement, the executive officer is obligated to remain with Polycom for six months following a change of control of Polycom (as defined in the agreements and whereby the merger will constitute a change of control of Polycom under the agreements), subject to certain limitations. If, within 12 months following a change of control (or within 24 months following a change of control for Mr. Leav), the executive officer is involuntarily terminated other than for cause (as defined in the change of control severance agreements), resigns for good reason (as defined in the change of control severance agreements), or dies or terminates employment due to disability, he or she will receive:

 

•

a lump sum payment equal to 100% of annual base salary and target bonus (or, for Mr. Leav, 200% of annual base salary and target bonus);

 

•

a lump sum cash payment equal to 24 multiplied by his or her monthly premium for continued health care coverage for the executive officer and his or her spouse and eligible dependents under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, in the first month following termination of employment; and

 

•

full vesting of then-outstanding Polycom equity awards and the immediate right to exercise any then-outstanding Polycom stock option awards and similar awards, with any performance goals subject to Polycom performance share awards or other performance-based awards deemed achieved at the target levels.

If such executive officer’s employment is terminated for any other reason, he or she will receive severance or other benefits only to the extent he or she would be entitled to receive those benefits under Polycom’s then-existing severance or benefit plans or pursuant to any other written agreement.

 

Please also see the section entitled “The Merger—Interests of Directors and Executive Officers in the Merger—Change of Control Severance Agreements for Polycom’s Executive Officers,” beginning on page 99 of this proxy statement/prospectus, for further information regarding these change of control severance agreements.

For a further discussion of the interests of Polycom’s directors and executive officers in the Merger, see “The Merger—Interests of Directors and Executive Officers in the Merger” beginning on page 96 of this proxy statement/prospectus.

The Mitel Voting Agreements

In connection with entering into the merger agreement,

 

•

Elliott Associates, L.P., which is referred to as Elliott,

 

•

Terence H. Matthews, the chairman of the Mitel Board, and Kanata Research Park Corporation, which are referred to as the Matthews Group,

 

•

Arsenal Holdco I, S.A.R.L., Arsenal Holdco II, S.A.R.L., Francisco Partners II (Cayman ), LP, Francisco Partners Parallel Fund II, LP, Francisco Partners GP II (Cayman) LP and Francisco Partners Management, LP, which are referred to as the Francisco Partners Group, and

 

•

each of the other members of the Mitel Board and certain officers of Mitel,

who are, collectively, referred to as the Mitel Supporting Shareholders, entered into voting agreements with Polycom, which are referred to as the Mitel voting agreements, pursuant to which they agreed to, among other things, at each meeting of the shareholders of Mitel (and at every adjournment or postponement thereof), be present (in person or by proxy) and vote their Mitel common shares:

 

•

in favor of the adoption of the merger agreement and any other matters at such meeting of the shareholders which the Mitel Board has determined is (1) necessary for the consummation of the merger, (2) disclosed in Mitel’s proxy circular or other written materials distributed to all shareholders of Mitel, and (3) recommended that the shareholders of Mitel adopt; and

 

•

against (1) any corporate action the consummation of which would in any material respect impede, interfere or prevent the consummation of the merger, (2) any acquisition proposal (as defined below) to Mitel, and (3) any action that would reasonably be expected to result in a breach of any covenant, representation or warranty or other obligation or agreement of such Mitel Supporting Shareholder under its Mitel voting agreement.

The Mitel voting agreements terminate upon the earliest to occur of: (1) the termination of the merger agreement in accordance with its terms; (2) the consummation of the merger; or (3) the date of any amendment, modification or waiver of the merger agreement that increases the amount, or changes the form, of consideration payable to the stockholders of Polycom pursuant to the merger agreement.

As of the close of business on May 31, 2016, the Mitel Supporting Shareholders had the power to vote and were the beneficial owners of, collectively, approximately 25.6% and 30.4%, respectively, of the issued and outstanding Mitel common shares. The percentage of Mitel common shares that the Mitel Supporting Shareholders have the power to vote or beneficially own collectively as of the record date for Mitel’s annual and special meeting of its shareholders is not expected to be meaningfully different from the percentage as of May 31, 2016.

For a further discussion of the Mitel voting agreements, see the section entitled “The Mitel Voting Agreements,” beginning on page 153 of this proxy statement/prospectus.

 

The Polycom Voting Agreements

In connection with entering into the merger agreement, the Polycom Supporting Stockholders entered the Polycom voting agreements. Under the Polycom voting Agreements, the Polycom Supporting Stockholders agreed to, among other things, at each meeting of the stockholders of Polycom vote (or consent to be voted) all their shares of Polycom stock:

 

•

in favor of the adoption of the merger agreement and any other matters at such meeting of the stockholders which the Polycom Board has determined is (1) necessary for the consummation of the merger, (2) disclosed in this proxy statement/prospectus or other written materials distributed to all stockholders of Polycom, and (3) recommended that the stockholders of Polycom adopt; and

 

•

against (1) any corporate action the consummation of which would in any material respect impede, interfere or prevent the consummation of the merger, (2) any acquisition proposal (as defined below) to Polycom, and (3) any action that would reasonably be expected to result in a breach of any covenant, representation or warranty or other obligation or agreement of such Polycom Supporting Stockholder under its Polycom voting agreement.

The Polycom voting agreements terminate upon the earliest to occur of: (1) the termination of the merger agreement in accordance with its terms; (2) the consummation of the merger; or (3) the date of any amendment, modification or waiver of the merger agreement that reduces the amount, changes the form, or delays the timing of payment, of consideration payable to the stockholders of Polycom pursuant to the merger agreement.

As of the close of business on May 31, 2016, the Polycom Supporting Stockholders had the power to vote and were the beneficial owners of, collectively, approximately 7.3% and 7.3%, respectively, of the issued and outstanding shares of Polycom stock. The percentage of shares of Polycom stock that the Polycom Supporting Stockholders have the power to vote or beneficially own collectively as of the record date is not expected to be meaningfully different from the percentage as of May 31, 2016.

For a further discussion of the Polycom voting agreements, see the section entitled “The Polycom Voting Agreements,” beginning on page 156 of this proxy statement/prospectus.

Material U.S. Federal Income Tax Consequences of the Merger

In general, as a result of the merger, each U.S. Holder (as defined in the section entitled “The Merger—Material U.S. Federal Income Tax Consequences,” beginning on page 112 of this proxy statement/prospectus) will be required to recognize gain or loss with respect to its shares of Polycom stock exchanged in the merger in an amount equal to the difference between (1) the fair market value of the merger consideration received by such U.S. Holder and (2) the adjusted tax basis of the shares of Polycom stock exchanged therefor. Any gain or loss realized by a Non-U.S. Holder (as defined in the section entitled “The Merger—Material U.S. Federal Income Tax Consequences”) upon the exchange of shares of Polycom stock for the merger consideration generally will not be subject to U.S. federal income tax, subject to certain exceptions. The consequences described above may differ, however, with respect to a Polycom stockholder that owns, actually or constructively, Mitel common shares other than those received in the merger, or that has a stock ownership interest in Mitel after the merger that is more than “minimal,” as described in the section entitled “The Merger—Material U.S. Federal Income Tax Consequences.”

Mitel and Polycom intend to treat the merger as divided for U.S. federal income tax purposes into two transactions: (1) the redemption of a portion of the shares of Polycom stock held by each Polycom stockholder for the redemption cash, and (2) the exchange of a portion of the shares of Polycom stock held by each Polycom stockholder for Mitel common shares and the merger cash. The shares of Polycom stock held by each Polycom stockholder will be divided between these transactions based on the relative fair market values of the merger consideration exchanged for such shares.

 

The tax rules applicable to the merger, in particular relating to the treatment of the merger cash, are complex, and the outcome may vary depending on the specific facts and circumstances of any given Polycom stockholder. You are urged carefully to read the discussion in the section entitled “The Merger—Material U.S. Federal Income Tax Consequences,” beginning on page 112 of this proxy statement/prospectus. Furthermore, you are urged to consult your own tax advisor for a full understanding of the tax consequences of the merger.

Accounting Treatment of the Merger

The merger will be accounted for as an acquisition of Polycom by Mitel under the acquisition method of accounting in accordance with accounting principles generally accepted in the U.S., which is referred to as GAAP. For a more detailed discussion of the accounting treatment of the merger, see “The Merger—Accounting Treatment” beginning on page 103 of this proxy statement/prospectus.

Appraisal Rights

Under Delaware law, if the merger is completed, record holders of Polycom stock who do not vote in favor of the adoption of the merger agreement and who otherwise properly exercise their appraisal rights will be entitled to seek appraisal for, and obtain payment in cash for the judicially determined fair value of, their shares of Polycom stock, in lieu of receiving the merger consideration. The “fair value” could be higher or lower than, or the same as, the merger consideration. The relevant provisions of the DGCL are included as Annex C to this proxy statement/prospectus. Polycom stockholders are encouraged to read these provisions carefully and in their entirety. Moreover, due to the complexity of the procedures for exercising the right to seek appraisal, Polycom stockholders who are considering exercising that right are encouraged to seek the advice of legal counsel. Failure to comply strictly with these provisions may result in loss of the right of appraisal. For a more detailed description of Polycom stockholder’s appraisal rights, see the section entitled “The Merger—Appraisal Rights of Polycom Stockholders,” beginning on page 108 of this proxy statement/prospectus.

Regulatory Approvals

To complete the merger, Mitel and Polycom must obtain certain approvals or consents from, or make filings with, a number of United States federal and foreign antitrust regulators and other regulatory authorities described below. For more information about regulatory approvals relating to the merger, see the sections entitled “The Merger—Regulatory Approvals Required for the Merger,” beginning on page 104, “The Merger Agreement—Covenants and Agreements—Reasonable Best Efforts and Regulatory Filings,” beginning on page 143 and “The Merger Agreement—Conditions to the Merger,” beginning on page 147 of this proxy statement/prospectus. Although we expect that all regulatory clearances and approvals will be obtained, we cannot assure you that these clearances and approvals will be timely obtained or obtained under the terms of the merger agreement at all or that the granting of these clearances and approvals will not involve the imposition of additional conditions on the completion of the merger, or require changes to the terms of the merger agreement. These conditions or changes could result in the conditions to the merger not being satisfied.

HSR Act

The merger is subject to the requirements of the Hart Scott Rodino Antitrust Improvements Act of 1976, as amended, which is referred to as the HSR Act, which provides that certain transactions may not be completed until required information has been furnished to the Antitrust Division of the Department of Justice, which is referred to as the DOJ, and the Federal Trade Commission, which is referred to as the FTC, and until certain waiting periods have been terminated, have expired or approval has been obtained. Each of Mitel and Polycom filed a Pre-Merger Notification and Report Form under the HSR Act with the FTC and the DOJ in connection with the merger on May 6, 2016. Early termination of the waiting period under the HSR Act was granted on May 13, 2016.

 

German ARC

The German Act Against Restraints of Competition of 1958, which is referred to as the German ARC, imposes a pre-merger notification requirement on all transactions that qualify as concentrations and meet certain specified financial thresholds, which the merger meets. Accordingly, consummation of the merger is conditional upon the merger being cleared by the German Federal Cartel Office, which is referred to as the Bundeskartellamt. Clearance can be granted explicitly or is also considered granted if, after a transaction has been notified, the applicable waiting periods expire without any decision by the Bundeskartellamt. The merger received clearance under the German ARC on June 2, 2016.

Russian FLN 135

Under the Russian Federal Law No.135-FZ dated July 26, 2006, “On Protection of Competition,” which is referred to as the Russian FLN 135, and related regulations, consummation of the merger is subject to the consent of the Federal Antimonopoly Service of the Russian Federation, which is referred to as FAS Russia. The merger received clearance under the Russian FLN 135 on June 10, 2016.

CFIUS

Pursuant to Section 721 of the Defense Production Act of 1950, which is referred to as Exon-Florio, the Committee on Foreign Investment in the United States, which is referred to as CFIUS, has the jurisdiction to review any merger, acquisition or takeover, by or with a foreign person, that could result in foreign control of any “U.S. business” for the impact of such transaction on U.S. national security. Parties to transactions subject to CFIUS’s jurisdiction may voluntarily notify CFIUS of their proposed transactions. In general, CFIUS review of a transaction occurs in an initial 30-day review period that may be extended by CFIUS for an additional 45-day investigation period. The closing of the merger is conditioned on receipt by Mitel and Polycom of the CFIUS approval, which is more fully described in the section entitled “The Merger—Regulatory Approvals Required for the Merger,” beginning on page 104 of this proxy statement/prospectus.

Source and Amount of Funds

Mitel estimates that the total amount of funds necessary to complete the merger and the other transactions contemplated by the merger agreement will be approximately $1,470.4 million (which amount represents the cash required to fund the aggregate cash consideration payable in the merger, the repayment of Mitel and Polycom indebtedness and the payment of fees, expenses and taxes related to the transactions contemplated by the merger agreement). Mitel expects to fund these payments using a combination of cash on hand from the combined businesses and other funds available, including through debt financing pursuant to a debt commitment from Bank of America, N.A., which is referred to as the initial lender, in an aggregate principal amount of $1,085 million, which is referred to as the debt financing.

On April 15, 2016, Mitel entered into a debt commitment letter, which is referred to as the commitment letter, with the initial lender and Merrill Lynch, Pierce, Fenner & Smith Incorporated, which is referred to as the arranger, pursuant to which, in connection with the merger, the initial lender committed to provide a $1,050 million senior secured first lien term loan facility, which is referred to as the term facility, and a $35 million senior secured first lien revolving credit facility, which is referred to as the revolving facility, and which, together with the term facility, are referred to as the facilities. The facilities are expected to be used to (1) finance a portion of the aggregate cash consideration required to purchase shares of Polycom stock pursuant to the merger agreement, (2) finance the cash-out of outstanding Polycom stock option awards and Polycom vested awards pursuant to the merger agreement, (3) refinance existing indebtedness of Mitel, Polycom and their respective subsidiaries, (4) pay fees and expenses in connection with the merger and the facilities, including in connection

 

with the repayment of Mitel’s and Polycom’s existing indebtedness, and (5) after the closing of the merger, with respect to the revolving facility, fund working capital and general corporate purposes of Mitel and its subsidiaries.

The obligations of the lenders to make the facilities available to Mitel are subject to certain conditions including, but not limited to, the execution and delivery of mutually acceptable definitive loan documents, which are expected to contain customary representations, warranties, covenants and events of default, consummation of the merger concurrently with the borrowings under the facilities, the absence of the occurrence of a material adverse effect (which is defined in a manner to be identical to the corresponding definition in the merger agreement) with respect to Polycom and its subsidiaries, taken as a whole, the absence of the occurrence of a material adverse effect (which is defined in a manner consistent with the merger agreement) with respect to Mitel, Polycom and their respective subsidiaries, taken as a whole, the accuracy of certain representations and warranties in relation to each of Mitel and Polycom in all material respects, and the arranger having been provided a specified period to syndicate the facilities with assistance by Mitel and Polycom as set forth in the commitment letter. For a more detailed description of the commitment letter and the facilities, see the section entitled “Source and Amount of Funds,” beginning on page 127 of this proxy statement/prospectus.

Conditions to Completion of the Merger

The parties expect to complete the merger after all of the conditions to the merger in the merger agreement are satisfied or waived, including after Polycom stockholder approval of the adoption of the merger agreement at the Polycom special meeting, Mitel shareholder approval of the Mitel share issuance, which is referred to as the Mitel shareholder approval, at the Mitel annual and special meeting, receipt of all required regulatory approvals, and the expiration of the first period of 15 consecutive business days after the date of the merger agreement throughout which (1) Mitel has received certain required financial information from Polycom related to financing the merger, which is referred to as the required information, (2) certain conditions to Mitel’s obligation to complete the merger have been satisfied or waived, and (3) nothing has occurred and no condition or state of facts exists that would cause any of the conditions to Mitel’s obligation to complete the merger to fail to be satisfied assuming the closing of the merger were to be scheduled on the last day of such 15 consecutive business day period.

Conditions to the Obligations of the Parties to Complete the Merger

The obligations of each of Mitel, Merger Sub and Polycom to complete the merger are subject to the satisfaction (or waiver to the extent permissible under the merger agreement) of various conditions, including the following:

 

•

Mitel having obtained the Mitel shareholder approval and Polycom having obtained the Polycom stockholder approval;

 

•

the Mitel common shares to be issued in the merger having been approved for listing on the NASDAQ and the TSX;

 

•

no law or order will have been promulgated, entered, enforced, enacted or issued or be applicable to the merger or the Mitel share issuance by any governmental entity that prohibits, restrains or makes illegal the consummation of the merger or the Mitel share issuance;

 

•

the registration statement of which this proxy statement/prospectus forms a part having become effective, and not subject to any stop order or any proceeding seeking a stop order; and

 

•

the waiting period (or any extension) applicable to the merger under the HSR Act must have expired or been terminated, and Mitel and Polycom must have received evidence of clearance of the merger from

 

the relevant governmental authorities in Germany or Russia, or the waiting period applicable to the merger under the German ARC and the Russian FLN 135 must have expired or been terminated.

Conditions to the Obligations of Each of Mitel and Merger Sub to Complete the Merger

The obligations of Mitel and Merger Sub to complete the merger are also subject to the satisfaction (or waiver to the extent permissible under the merger agreement) on or prior to the effective time of the following conditions:

 

•

the representations and warranties of Polycom in the merger agreement with respect to Polycom’s corporate organization, corporate authorization and ownership of subsidiaries, an absence of certain changes, finder’s fees, the opinion of Polycom’s financial advisor and anti-takeover laws applicable to Polycom will be accurate in all material respects as of the date of the merger agreement and the date of the closing of the merger (other than if made as of an earlier date, then as of such earlier date);

 

•

the representations and warranties of Polycom in the merger agreement with respect to certain matters of Polycom’s capitalization will be accurate in all respects as of the date of the merger agreement and as of the date of the closing of the merger (other than if made as of an earlier date, then as of such earlier date), except for any inaccuracies in such representations and warranties which do not increase Polycom’s fully diluted capitalization by more than 0.10% in the aggregate from Polycom’s fully diluted capitalization;

 

•

all other representations and warranties of Polycom in the merger agreement being true and correct in all respects (without giving effect to any materiality or material adverse effect qualifier in such representation or warranty), as of the date of the merger agreement and as of the closing date of the merger (other than if made as of an earlier date, then as of such earlier date), except to the extent that breaches of such representations or warranties, individually or in the aggregate, have not had, and would not reasonably be expected to have or result in, a material adverse effect on Polycom;

 

•

Polycom having complied with or performed in all material respects all of the covenants and agreements it is required to comply with or perform in the merger agreement at or prior to the closing date of the merger;

 

•

as of the closing of the merger, Polycom (excluding its subsidiaries) must have no less than $475 million (or such lesser amount specified by Mitel) in U.S. currency in its bank accounts in the United States;

 

•

Mitel having received a certificate signed on behalf of Polycom by its chief executive officer and chief financial officer certifying that the conditions above have been satisfied;

 

•

since the date of the merger agreement, Polycom must not have suffered a material adverse effect that is continuing; and

 

•

the approval of the merger from CFIUS must have been obtained.

Conditions to the Obligations of Polycom to Complete the Merger

The obligation of Polycom to complete the merger is also subject to the satisfaction (or waiver to the extent permissible under the merger agreement) on or prior to the effective time of the following conditions:

 

•

the representations and warranties of Mitel and Merger Sub in the merger agreement with respect to their corporate organization and corporate authorization, an absence of certain changes, finder’s fees, the opinion of Mitel’s financial advisor, their ownership of Polycom stock and anti-takeover laws applicable to Mitel will be accurate in all material respects as of the date of the merger agreement and the date of the closing of the merger (other than if made as of an earlier date, then as of such earlier date);

 

•

all other representations and warranties of Mitel and Merger Sub in the merger agreement being true and correct in all respects (without giving effect to any materiality or material adverse effect qualifier in such representation or warranty), as of the date of the merger agreement and as of the closing date of the merger (other than if made as of an earlier date, then as of such earlier date), except to the extent that breaches of such representations or warranties, individually or in the aggregate, have not had, and would not reasonably be expected to have or result in, a material adverse effect on Mitel;

 

•

Mitel and Merger Sub having complied with or performed in all material respects all of the covenants and agreements they are required to comply with or perform in the merger agreement at or prior to the closing date of the merger;

 

•

Polycom having received a certificate signed on behalf of Mitel by its chief executive officer and chief financial officer certifying that the conditions above have been satisfied; and

 

•

since the date of the merger agreement, Mitel must not have suffered a material adverse effect that is continuing.

Timing of the Merger

The merger is expected to be completed during the third quarter of 2016. However, it is possible that factors outside of each company’s control could require them to complete the merger at a later time or not to complete the merger at all.

No Solicitation

In the merger agreement, each of Mitel and Polycom has agreed not to, nor permit any of its subsidiaries to, nor authorize or permit any of the officers, directors or employees or any affiliate, investment banker, financial advisor, attorney, accountant or other representative retained by it or its subsidiaries to, directly or indirectly:

 

•

solicit, initiate or knowingly encourage (including by way of furnishing information), or knowingly facilitate, any inquiry or the making of any proposal which constitutes, or would reasonably be expected to lead to, any acquisition proposal (defined below);

 

•

approve or recommend any acquisition proposal;

 

•

approve or recommend, or execute or enter into, any letter of intent, memorandum of understanding, merger agreement or other agreement, arrangement or understanding relating to any acquisition proposal (other than an acceptable confidentiality agreement, which is described below, entered into in accordance with the merger agreement);

 

•

enter into, continue or otherwise participate in any discussions or negotiations regarding any acquisition proposal; or

 

•

agree to do any of the foregoing.

The merger agreement includes customary exceptions such that, prior to the Mitel shareholder vote (in the case of Mitel) or the Polycom stockholder vote (in the case of Polycom), the parties may engage in negotiations regarding and, subject to complying with certain specified procedures and, in certain circumstances, a payment of a termination fee as described below, the applicable party’s board of directors may change its recommendation of the merger (1) in light of, or terminate the merger agreement to enter into an agreement for, an unsolicited takeover proposal that is determined to be a superior proposal (as defined below), or (2) in light of an intervening event (as defined below), in each case, to the extent necessary to do so to comply with applicable fiduciary duties. For a more detailed discussion of the limitations on solicitation of acquisition proposals from third parties

 

and the ability of each company’s board of directors to change its recommendation for the merger, see the section entitled “The Merger Agreement—Covenants and Agreements—No Solicitation,” beginning on page 140 of this proxy statement/prospectus.

Termination of the Merger Agreement; Termination Fees

The merger agreement may be terminated and the merger may be abandoned at any time prior to the effective time of the merger:

 

•

by the mutual written consent of Mitel and Polycom;

 

•

by either Mitel or Polycom:

 

•

if any court or governmental authority of competent jurisdiction has issued a final and non-appealable order or enacted a law permanently restraining, enjoining or otherwise prohibiting or making illegal the merger or the Mitel share issuance;

 

•

if the merger has not been completed by October 13, 2016, which is referred to as the outside date; provided, however, in the event the marketing period has commenced but the 15 consecutive business day period has not been completed on or before such date, it will be extended for the remaining 15 consecutive business day period plus five business days; provided, however, that this right to terminate will not be available to any party whose breach of any provision of the merger agreement results in the failure of the effective time to have occurred by such time;

 

•

if the Polycom stockholder approval is not obtained at the Polycom special meeting or at any adjournment or postponement of such meeting; or

 

•

if the Mitel shareholder approval is not obtained at the Mitel annual and special meeting or at any adjournment or postponement of such meeting;

 

•

by Polycom:

 

•

prior to the receipt of the Mitel shareholder approval, if the Mitel Board or any of its committees makes an adverse recommendation change (as described below);

 

•

prior to the receipt of the Polycom stockholder approval, if (1) the Polycom Board authorizes Polycom to enter into an acquisition agreement with a third party with respect to a superior proposal in accordance with the terms of the merger agreement, (2) substantially concurrent with the termination of the merger agreement, Polycom enters into the acquisition agreement with such third party, and (3) prior to or concurrently with such termination, Polycom pays to Mitel, in immediately available funds, a termination fee of $60 million;

 

•

at any time prior to the effective time if (1) any of Mitel’s representations or warranties in the merger agreement have become inaccurate, such that the condition regarding the bring down of Mitel’s representations and warranties would not be satisfied, or (2) Mitel has failed to comply with or perform its covenants or agreements in the merger agreement, such that the condition regarding the bring down of Mitel’s covenants and agreements would not be satisfied, subject to certain rights to cure such inaccuracies or breaches; provided, however, that Polycom shall not have the right to terminate the merger agreement if Polycom is then in material breach of any of its representations, warranties, covenants or agreements under the merger agreement;

 

•

by Mitel:

 

•

prior to the receipt of the Polycom stockholder approval, if the Polycom Board or any of its committees makes an adverse recommendation change;

 

•

prior to the receipt of the Mitel shareholder approval, if (1) the Mitel Board authorizes Mitel to enter into an acquisition agreement with a third party with respect to a superior proposal in

 

accordance with the terms of the merger agreement, (2) substantially concurrent with the termination of the merger agreement, Mitel enters into the acquisition agreement with such third party, and (3) prior to or concurrently with such termination, Mitel pays to Polycom, in immediately available funds, a termination fee of $50 million;

 

•

at any time prior to the effective time if (1) any of Polycom’s representations or warranties in the merger agreement have become inaccurate, such that the condition regarding the bring down of Polycom’s representations and warranties would not be satisfied, or (2) Polycom has failed to comply with or perform its covenants or agreements in the merger agreement, such that the condition regarding the bring down of Polycom’s covenants and agreements would not be satisfied, subject to certain rights to cure such inaccuracies or breaches; provided, however, that Mitel shall not have the right to terminate the merger agreement if Mitel is then in material breach of any of its representations, warranties, covenants or agreements under the merger agreement.

If the merger agreement is terminated as described above, the merger agreement will be void and have no effect, and there will not be any liability or obligation on the part of any party, except that:

 

•

certain other provisions of the merger agreement with respect to indemnification, expense reimbursement and the allocation of fees and expenses, including, if applicable, the termination fees described below, will survive termination;

 

•

no termination will affect the obligations of the parties contained in the confidentiality agreement; and

 

•

no termination will relieve any party from liability for willful breach of a representation, warranty or covenant in the merger agreement.

Under the merger agreement, Polycom has agreed to pay Mitel a termination fee of $60 million if the merger agreement is terminated as described below:

 

•

by Mitel or Polycom at the outside date or if the Polycom stockholder approval was not obtained at the special meeting, and at or prior to the termination, an acquisition proposal to Polycom has been disclosed, announced, commenced, submitted or made and within twelve (12) months after the date of any such termination Polycom enters into a definitive agreement with respect to any acquisition proposal for the acquisition of more than 50% of Polycom’s voting stock or assets or any such acquisition proposal is consummated (regardless of whether it is the same acquisition proposal);

 

•

by Mitel if the Polycom Board or any committee thereof has made an adverse recommendation change;

 

•

by Polycom to enter into an acquisition agreement that is a superior proposal; or

 

•

by Polycom at the outside date and the Polycom Board or any committee thereof has made an adverse recommendation change and the Polycom stockholder approval was not received.

Under the merger agreement, Mitel has agreed to pay Polycom a termination fee of $50 million if the merger agreement is terminated as described below:

 

•

by Mitel or Polycom at the outside date or if the Mitel shareholder approval was not obtained at the Mitel annual and special meeting, and at or prior to the termination, an acquisition proposal to Mitel has been disclosed, announced, commenced, submitted or made and within twelve (12) months after the date of any such termination Mitel enters into a definitive agreement with respect to any acquisition proposal for the acquisition of more than 50% of Mitel’s voting stock or assets or any such acquisition proposal is consummated (regardless of whether it is the same acquisition proposal);

 

•

by Polycom if the Mitel Board or any committee thereof has made an adverse recommendation change;

 

•

by Mitel to enter into an acquisition agreement that is a superior proposal; or

 

•

by Mitel at the outside date and the Mitel Board or any committee thereof has made an adverse recommendation change and the Mitel shareholder approval was not received.

If paid to Polycom or Mitel, the termination fee will be the receiving party’s sole and exclusive remedy under the merger agreement, and the paying party and certain other parties identified in the merger agreement will have no further liability to the receiving party and certain other parties identified in the merger agreement in connection with the merger agreement, except in the case of a willful breach by the paying party.

For a more detailed discussion of each party’s termination rights and the related termination fee obligations, see the sections entitled “The Merger Agreement—Termination,” beginning on page 149, “The Merger Agreement—Effect of Termination,” beginning on page 151, and “The Merger Agreement—Termination Fees,” beginning on page 151 of this proxy statement/prospectus.

Matters to be Considered at the Special Meeting

At the Polycom special meeting, Polycom stockholders will be asked to consider and vote upon:

 

•

the Merger proposal; and

 

•

the Adjournment proposal.

Approval of the Merger proposal by Polycom stockholders is required for completion of the merger.

The affirmative vote of holders of a majority of the shares of Polycom stock issued and outstanding and entitled to vote on the record date for the special meeting is required to approve the Merger proposal.

The affirmative vote of the holders of a majority of the stock having voting power present in person or represented by proxy at the special meeting is required to approve the Adjournment proposal.

If a quorum is not present, the special meeting may be adjourned by the chairman of the meeting. For a more detailed discussion of the requirements for quorum and adjournment, see the section entitled “Special Meeting—Quorum,” beginning on page 161 of this proxy statement/prospectus.

The Polycom Board unanimously recommends that Polycom stockholders vote “FOR” all of the proposals set forth above, as more fully described under the section entitled “Polycom Proposals,” beginning on page 165 of this proxy statement/prospectus.

Voting by Polycom Directors and Executive Officers

At the close of business on May 31, 2016, the most recent practicable date for which such information was available, Polycom directors and executive officers and their affiliates were entitled to vote 1,074,556 shares of Polycom stock or approximately 0.8% of the shares of Polycom stock outstanding on that date. The number and percentage of shares of Polycom stock owned by directors and executive officers of Polycom and their affiliates as of the record date are not expected to be meaningfully different from the number and percentage as of May 31, 2016. Polycom directors and executive officers are obligated to vote their shares in favor of all Polycom proposals pursuant to the Polycom voting agreement to which each is a party. For a further discussion of the Polycom voting agreements, see the section entitled “The Polycom Voting Agreements,” beginning on page 156 of this proxy statement/prospectus.

Risk Factors

You should also carefully consider the risks that are described in the section entitled “Risk Factors,” beginning on page 38 of this proxy statement/prospectus.

 

SUMMARY SELECTED HISTORICAL FINANCIAL DATA

The following summary selected historical financial information is being provided to assist you in your analysis of the financial aspects of the merger.

The consolidated statement of operations data of Mitel for the years ended December 31, 2015 and December 31, 2014, the eight months ended December 31, 2013 and the year ended April 30, 2013, and the consolidated balance sheet data of Mitel as of December 31, 2015 and 2014 are derived from, and are qualified by reference to, the audited consolidated financial statements included in Mitel’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015, as amended, which is incorporated by reference into this proxy statement/prospectus. The consolidated statement of operations data of Mitel for the years ended April 30, 2012 and 2011, and the consolidated balance sheet data of Mitel as of December 31, 2013 and as of April 30, 2013, 2012 and 2011 are derived from audited consolidated financial statements of Mitel that are not incorporated by reference into this proxy statement/prospectus. The data as of and for the three months ended March 31, 2016 and 2015 of Mitel is derived from unaudited consolidated financial statements of Mitel, which are incorporated by reference into this proxy statement/prospectus, and in the opinion of Mitel’s management includes all normal and recurring adjustments that are considered necessary for the fair presentation of the results for the interim period.

The consolidated statement of operations data of Polycom for the years ended December 31, 2015, 2014 and 2013, and the consolidated balance sheet data of Polycom as of December 31, 2015 and 2014 are derived from, and are qualified by reference to, the audited consolidated financial statements included in Polycom’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015, as amended, which is incorporated by reference into this proxy statement/prospectus. The consolidated statement of operations data of Polycom for the years ended December 31, 2012 and 2011, and the consolidated balance sheet data of Polycom as of December 31, 2013, 2012 and 2011 are derived from audited consolidated financial statements of Polycom that are not incorporated by reference into this proxy statement/prospectus. The data as of and for the three months ended March 31, 2016 and 2015 of Polycom is derived from unaudited consolidated financial statements of Polycom, which are incorporated by reference into this proxy statement/prospectus, and in the opinion of Polycom’s management includes all normal and recurring adjustments that are considered necessary for the fair presentation of the results for the interim period.

The information is only a summary and should be read in conjunction with each company’s historical consolidated financial statements and related notes, and related “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contained in the Mitel and Polycom annual reports on Form 10-K for the year ended December 31, 2015 and quarterly reports on Form 10-Q for the period ended March 31, 2016, which are incorporated by reference into this proxy statement/prospectus, as well as other information that has been filed with the SEC. See the section entitled “Where You Can Find More Information,” beginning on page 203 of this proxy statement/prospectus, for information on where you can obtain copies of this information. The historical results included below and elsewhere in this proxy statement/prospectus are not necessarily indicative of the future performance of Mitel, Polycom or the combined company.

 

Mitel Summary Selected Historical Financial Data

 

(in millions, except share data)		Three Months Ended March 31,								Year Ended December 31,								Eight Months Ended December 31, 2013				Year Ended April 30,
		2016 (1)				2015				2015 (1)				2014 (2)								2013				2012				2011
Consolidated Statement of Operations Data
Revenues		$	276.1			$	248.1			$	1,157.7			$	1,104.0			$	357.3			$	576.9			$	611.8			$	589.3
Cost of revenues			128.3				117.7				543.8				513.9				153.3				256.3				282.4				281.9
Gross margin			147.8				130.4				613.9				590.1				204.0				320.6				329.4				307.4
Expenses:
Selling, general and administrative			97.2				81.6				363.0				344.7				132.1				198.7				200.6				190.5
Research and development			36.8				26.9				131.4				118.3				38.3				55.7				58.6				61.3
Special charges and restructuring costs			15.8				13.0				54.6				72.7				14.6				21.8				18.6				16.5
Amortization of acquisition-related intangible assets			18.9				14.1				75.1				53.4				16.5				22.3				22.3				22.3
			168.7				135.6				624.1				589.1				201.5				298.5				300.1				290.6
Operating income (loss)			(20.9	)			(5.2	)			(10.2	)			1.0				2.5				22.1				29.3				16.8
Interest expense			(10.0	)			(4.6	)			(32.4	)			(21.0	)			(17.1	)			(19.7	)			(18.8	)			(20.0	)
Debt retirement and other debt costs			(1.3	)			(0.7	)			(9.6	)			(16.2	)			(0.6	)			(2.6	)			—				(0.6	)
Other income (expense), net			(0.7	)			15.4				20.9				6.0				(0.4	)			1.3				(0.7	)			1.8
Income tax recovery			10.5				0.4				10.6				22.9				10.1				8.8				39.4				88.4
Net income (loss) from continuing operations			(22.4	)			5.3				(20.7	)			(7.3	)			(5.5	)			9.9				49.2				86.4
Net income (loss) from discontinued operations			—				—				—				—				—				(3.7	)			0.6				1.7
Net income (loss)		$	(22.4	)		$	5.3			$	(20.7	)		$	(7.3	)		$	(5.5	)		$	6.2			$	49.8			$	88.1
Net income (loss) per common share—Basic:
Net income (loss) per share from continuing operations		$	(0.19	)		$	0.05			$	(0.18	)		$	(0.08	)		$	(0.10	)		$	0.19			$	0.92			$	1.63
Net income (loss) per share from discontinued operations			—				—				—				—				—				(0.07	)			0.01				0.03
Net income (loss) per common share		$	(0.19	)		$	0.05			$	(0.18	)		$	(0.08	)		$	(0.10	)		$	0.12			$	0.93			$	1.66
Net income (loss) per common share—  Diluted:
Net income (loss) per share from continuing operations		$	(0.19	)		$	0.05			$	(0.18	)		$	(0.08	)		$	(0.10	)		$	0.18			$	0.88			$	1.54
Net income (loss) per share from discontinued operations			—				—				—				—				—				(0.07	)			0.01				0.03
Net income (loss) per common share		$	(0.19	)		$	0.05			$	(0.18	)		$	(0.08	)		$	(0.10	)		$	0.11			$	0.89			$	1.57
Other Financial Data
Adjusted EBITDA (3):
Adjusted EBITDA		$	25.6			$	30.4			$	168.1			$	166.9			$	46.2			$	83.7			$	88.0			$	76.1
Ratio of earnings to fixed charges (4)			—				2.1x				—				—
Consolidated Balance Sheet Data
Cash and cash equivalents		$	83.4			$	100.8			$	91.6			$	111.3			$	40.2			$	69.0			$	78.7			$	73.9
Total assets		$	1,794.0			$	1,197.9			$	1,852.7			$	1,278.8			$	620.5			$	656.4			$	687.2			$	672.2
Total debt, including capital leases		$	608.4			$	291.4			$	645.3			$	309.8			$	269.5			$	288.1			$	311.8			$	323.3
Common shares		$	1,417.2			$	1,217.7			$	1,414.2			$	1,216.3			$	814.9			$	810.4			$	809.4			$	805.5
Warrants		$	39.1			$	39.1			$	39.1			$	39.1			$	39.1			$	39.1			$	55.6			$	55.6
Total shareholders’ equity		$	586.0			$	407.0			$	615.0			$	447.8			$	118.4			$	84.0			$	89.8			$	49.5

 

 

(1)

Includes the operations of Mavenir from date of acquisition of April 29, 2015, as disclosed in note 3 to Mitel’s audited consolidated financial statements included in Mitel’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015, which is incorporated by reference into this proxy statement/prospectus.

(2)

Includes the operations of Aastra from date of acquisition of January 31, 2014, as disclosed in note 3 to Mitel’s audited consolidated financial statements included in Mitel’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015, which is incorporated by reference into this proxy statement/prospectus.

(3)	Adjusted EBITDA is a non-GAAP measure. See the table presented below that presents a reconciliation of Adjusted EBITDA to net income (loss).

(4)

For purposes of the ratio of earnings to fixed charges, earnings consists of earnings (loss) from continuing operations, before taxes and interest expense; and fixed charges consists of interest expense. For the three months ended March 31, 2016 and 2015, the deficiency was $32.9 million. For the year ended December 31, 2015, the deficiency was $31.3 million. For the year ended December 31, 2014, the deficiency was $30.2 million.

The following table presents a reconciliation of Adjusted EBITDA, a non-GAAP measure, to net income (loss), the most directly comparable GAAP measure, for each of the periods indicated:

 

(in millions, except share data)		Three Months Ended March 31,								Year Ended December 31,								Eight Months Ended December 31, 2013				Year Ended April 30,
		2016				2015				2015				2014								2013				2012				2011
Net income (loss)		$	(22.4	)		$	5.3			$	(20.7	)		$	(7.3	)		$	(5.5	)		$	6.2			$	49.8			$	88.1
Net loss (income) from discontinued operations			—				—				—				—				—				3.7				(0.6	)			(1.7	)
Net income (loss) from continuing operations			(22.4	)			5.3				(20.7	)			(7.3	)			(5.5	)			9.9				49.2				86.4
Adjustments:
Interest expense			10.0				4.6				32.4				21.0				17.1				19.7				18.8				20.0
Income tax recovery			(10.5	)			(0.4	)			(10.6	)			(22.9	)			(10.1	)			(8.8	)			(39.4	)			(88.4	)
Amortization and depreciation			25.4				19.3				99.1				75.9				25.5				35.8				33.4				34.0
Foreign exchange loss (gain)			1.0				(14.7	)			(18.8	)			(3.9	)			0.5				(0.2	)			1.5				0.7
Special charges and restructuring costs			15.8				13.0				54.6				72.7				14.6				21.8				18.6				16.5
Stock-based compensation			4.3				1.8				12.8				6.1				3.1				4.2				4.8				4.7
Debt retirement and other debt costs			1.3				0.7				9.6				16.2				0.6				2.6				—				0.6
Purchase accounting adjustments (1)			0.7				0.8				9.7				9.1				—				—				—				—
Other			—				—				—				—				0.4				—				—				(1.0	)
Adjusted EBITDA from continuing operations			25.6				30.4				168.1				166.9				46.2				85.0				86.9				73.5
Adjusted EBITDA from discontinued operations (2)			—				—				—				—				—				(1.3	)			1.1				2.6
Adjusted EBITDA		$	25.6			$	30.4			$	168.1			$	166.9			$	46.2			$	83.7			$	88.0			$	76.1

 

(1)

In accordance with the fair value provisions applicable to the accounting for business combinations, acquired deferred revenue relating to acquisitions is recorded on the opening balance sheet at an amount that is generally lower than the historical carrying value. In addition, as a result of purchase accounting, Mitel only records revenue for the value of work performed subsequent to the date of acquisition. As a result, the fair value of in-progress contracts, representing work completed up to the acquisition date, is not recorded as revenue by Mitel, nor are associated costs recognized as cost of sales. Although this purchase accounting requirement has no impact on the Mitel’s business or cash flow, it impacts the Mitel’s reported GAAP revenue and cost of sales in the reporting periods following the acquisition. In order to provide investors with financial information that facilitates comparison of results, Mitel provides non-GAAP financial measures which exclude the impact of the purchase accounting adjustments. Mitel believes that this non-GAAP financial adjustment is useful to investors because it allows investors to compare reports of financial results of Mitel as the revenue reductions and adjustments to cost of sales related to acquired contracts and deferred revenue will not recur when similar sales contracts and software maintenance and service contracts are recorded in future periods.

 

(2)

The reconciliation of net income from discontinued operations to Adjusted EBITDA from discontinued operations for the years ended April 30, 2013 through April 30, 2011 consists of an adjustment for income tax expense (recovery) of ($0.5) million, $0.5 million and $0.9 million, respectively. The reconciliation of net loss from discontinued operations to Adjusted EBITDA from discontinued operations for the year ended April 30, 2013 consists of special charges and restructuring costs of $1.6 million, non-cash impairment of goodwill of $1.9 million and income tax recovery of $1.1 million.

Mitel defines Adjusted EBITDA as net income (loss), adjusted for the items as noted in the above tables. Adjusted EBITDA is not a measure calculated in accordance with GAAP. Adjusted EBITDA should not be considered as an alternative to net income, income from operations or any other measure of financial performance calculated and presented in accordance with GAAP. Mitel prepares Adjusted EBITDA to eliminate the impact of items that Mitel does not consider indicative of its core operating performance. Investors should evaluate these adjustments and the reasons Mitel considers them appropriate, as well as the material limitations of non-GAAP measures and the manner in which Mitel compensates for those limitations.

Mitel uses Adjusted EBITDA:

 

•

as a measure of operating performance;

 

•

for planning purposes, including the preparation of its annual operating budget;

 

•

to allocate resources to enhance the financial performance of its business; and

 

•

in communications with the Mitel Board concerning Mitel’s financial performance.

Mitel believes that the use of Adjusted EBITDA provides consistency and facilitates period to period comparisons, and may facilitate comparisons with other companies in its industry, many of which use similar non-GAAP financial measures to supplement their GAAP results.

Mitel believes Adjusted EBITDA may also be useful to investors in evaluating its operating performance because securities analysts use Adjusted EBITDA as a supplemental measure to evaluate the overall operating performance of companies. Its investor and analyst presentations also include Adjusted EBITDA. However, Mitel also cautions investors that other companies in its industry may calculate Adjusted EBITDA or similarly titled measures differently than it does, which limits the usefulness of Adjusted EBITDA as a comparative measure.

Moreover, although Adjusted EBITDA is frequently used by investors and securities analysts in their evaluations of companies, Adjusted EBITDA and similar non-GAAP measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for an analysis of Mitel’s results of operations as reported under GAAP.

Some of the limitations of Adjusted EBITDA are that it does not reflect:

 

•

cash requirements for interest expense;

 

•

cash requirements for income taxes;

 

•

foreign exchange gains or losses;

 

•

cash payments made in connection with litigation settlements;

 

•

significant cash payments made in connection with special charges and restructuring costs;

 

•

employee stock-based compensation; and

 

•

cash requirements for the replacement of assets that have been depreciated or amortized.

 

Mitel compensates for the inherent limitations associated with using Adjusted EBITDA through disclosure of such limitations, presentation of its financial statements in accordance with GAAP and reconciliation of Adjusted EBITDA to the most directly comparable GAAP measure, net income (loss).

Polycom Summary Selected Historical Financial Data

 

		Three Months Ended March 31,								Year Ended December 31,
										2015				2014				2013				2012				2011
		2016				2015
(in thousands, except per share data)
Consolidated Statement of Operations Data:
Revenues		$	290,075			$	330,700			$	1,267,225			$	1,345,154			$	1,368,389			$	1,392,628			$	1,402,189
Gross profit			163,829				192,820				738,753				785,009				792,771				823,432				858,264
Operating income (loss)			7,240				29,016				87,774				46,453				(17,193	)			6,366				132,826
Net income (loss) from continuing operations			3,335				21,198				69,975				42,059				(18,535	)			(36,969	)			124,930
Income from discontinued operations, net of taxes			—				—				—				—				—				9,888				9,906
Gain from sale of discontinued operations, net of taxes			—				—				—				—				459				35,425				—
Net income (loss)		$	3,335			$	21,198			$	69,975			$	42,059			$	(18,076	)		$	8,344			$	134,836
Basic net income (loss) per share:
Net income (loss) per share from continuing operations		$	0.02			$	0.16			$	0.52			$	0.31			$	(0.11	)		$	(0.21	)		$	0.71
Income per share from discontinued operations, net of taxes			—				—				—				—				—				0.06				0.06
Gain per share from sale of discontinued operations, net of taxes			—				—				—				—				—				0.20				—
Basic net income (loss) per share		$	0.02			$	0.16			$	0.52			$	0.31			$	(0.11	)		$	0.05			$	0.76
Diluted net income (loss) per share:
Net income (loss) per share from continuing operations		$	0.02			$	0.15			$	0.51			$	0.30			$	(0.11	)		$	(0.21	)		$	0.69
Income per share from discontinued operations, net of taxes			—				—				—				—				—				0.06				0.05
Gain per share from sale of discontinued operations, net of taxes			—				—				—				—				—				0.20				—
Diluted net income (loss) per share		$	0.02			$	0.15			$	0.51			$	0.30			$	(0.11	)		$	0.05			$	0.74

 

Note that as a result of the net loss from continuing operations for 2013 and 2012, all potentially issuable common shares have been excluded from the diluted shares used in the computation of net income (loss) per share for those periods as their effect was anti-dilutive.

 

		As at March 31,								As at December 31,
(in thousands)		2016				2015				2015				2014				2013				2012				2011
Consolidated Balance Sheet Data:
Cash, cash equivalents and short-term investments		$	672,031			$	627,597			$	619,335			$	628,915			$	527,313			$	674,269			$	534,667
Working capital			607,068				591,476				571,501				577,416				514,835				714,650				631,746
Total assets			1,799,689				1,800,859				1,782,247				1,829,267				1,746,544				1,912,436				1,843,301
Debt			233,086				238,803				234,516				240,233				245,952				—				—
Other long-term obligations			125,829				137,671				122,273				150,447				143,884				128,974				113,531
Total stockholders’ equity			1,069,645				1,022,453				1,053,209				1,023,733				976,365				1,427,774				1,368,612

Note that Polycom’s Consolidated Statements of Operations Data include the results of businesses acquired from their acquisition dates, with the most recent acquisition in March 2013.

 

SUMMARY UNAUDITED PRO FORMA COMBINED CONSOLIDATED FINANCIAL INFORMATION

The following table presents selected unaudited pro forma condensed combined financial information about Mitel’s consolidated balance sheet and statement of operations, after giving effect to the merger and the planned incurrence of $1,050 million of term debt and the repayment of Mitel’s and Polycom’s existing indebtedness prior to the merger, which is referred to together as the debt incurrence. The information under “Summary Unaudited Pro Forma Condensed Combined Statement of Operations Data” in the table below assumes the merger and the debt incurrence had been consummated as of January 1, 2015. It also assumes that Mitel’s acquisition of Mavenir, which was completed on April 29, 2015, had occurred on January 1, 2015. The information under “Summary Unaudited Pro Forma Condensed Combined Balance Sheet Data” in the table below assumes the merger and the debt incurrence had been consummated on March 31, 2016. This unaudited pro forma condensed combined financial information was prepared using the acquisition method of accounting with Mitel considered the acquirer of Polycom. See the section entitled “The Merger—Accounting Treatment,” beginning on page 103 of this proxy statement/prospectus.

The unaudited pro forma condensed combined financial information includes adjustments which are preliminary and may be revised. There can be no assurance that such revisions will not result in material changes. The information presented below should be read in conjunction with the historical consolidated financial statements of Mitel and Polycom, including the related notes, filed by each of them with the SEC, and with the pro forma condensed combined financial statements of Mitel and Polycom, including the related notes. See the section entitled “Unaudited Pro Forma Condensed Combined Financial Statements,” beginning on page 166 of this proxy statement/prospectus. The unaudited pro forma condensed combined financial data are not necessarily indicative of results that actually would have occurred had the merger and the debt incurrence been completed on the dates indicated or of results that may occur in the future.

Summary Unaudited Pro Forma Condensed Combined Statement of Operations Data

 

(in millions, except per share amounts)		Three Months Ended March 31, 2016				Year Ended December 31, 2015
Revenues		$	560.0			$	2,409.1
Cost of revenues			253.6				1,087.7
Gross margin			306.4				1,321.4
Expenses:
Selling, general and administrative			193.4				819.5
Research and development			79.0				335.1
Special charges and restructuring costs			27.5				83.0
Amortization of acquisition-related intangible assets			46.4				195.5
			346.3				1,433.1
Operating income (loss)			(39.9	)			(111.7	)
Interest expense			(18.4	)			(73.5	)
Debt retirement costs			(1.3	)			(10.2	)
Other income (expense)			0.2				23.1
Income (loss) before income taxes			(59.4	)			(172.3	)
Income tax recovery (expense)			19.5				51.6
Net income (loss)		$	(39.9	)		$	(120.7	)
Net loss per share—Basic and Diluted		$	(0.13	)		$	(0.41	)
Weighted-average number of common shares outstanding—Basic and Diluted			298.6				298.0
Ratio of earnings to fixed charges (1)			—				—

 

 

(1)

For purposes of the ratio of earnings to fixed charges, earnings consists of earnings (loss) from continuing operations, before taxes and interest expense; and fixed charges consists of interest expense. The deficiency for the three months ended March 31, 2016 was $59.4 million and for the year ended December 31, 2015 was $172.3 million.

Summary Unaudited Pro Forma Condensed Combined Balance Sheet Data

 

(in millions)		As at March 31, 2016
Cash and cash equivalents		$	314.1
Total assets			4,107.7
Debt (1)			1,009.9
Shareholders’ equity			1,800.7

 

(1)	Includes long-term debt and current portion of long-term debt.

 

UNAUDITED COMPARATIVE PER COMMON SHARE DATA

Set forth below are the Mitel and Polycom historical and pro forma amounts per common share for basic and diluted net income and book value. For purposes of the pro forma share amounts, we have calculated the merger consideration using the number of shares of Polycom stock and stock options outstanding at April 30, 2016. For a discussion of the assumptions and adjustments made in preparing the Unaudited Pro Forma Financial Information, see the section entitled “Unaudited Pro Forma Condensed Combined Financial Statements” and related notes, beginning on page 166 of this proxy statement/prospectus. The unaudited pro forma comparative per common share data is based on the historical financial statements of Mitel and Polycom, which are incorporated by reference into this proxy statement/prospectus, and has been prepared to reflect the merger and the debt incurrence as if they had been completed as of the dates indicated and the assumptions, reclassifications, and adjustments described in the accompanying notes to the Unaudited Pro Forma Condensed Combined Financial Statements.

The pro forma amounts per common share for basic and diluted net income for the year ended December 31, 2015 are based on the historical financial statements of Mitel and Polycom for the year then ended. The pro forma amounts per common share for basic and diluted net income for the three months ended March 31, 2016 are based on the historical financial statements of Mitel and Polycom for the three month period then ended.

The pro forma amounts per common share for basic and diluted net income for the year ended December 31, 2015 and the three months ended March 31, 2016 have been prepared as if the merger and the debt incurrence had occurred on January 1, 2015, and were carried forward through the periods presented, and taking into account the assumptions, reclassifications and adjustments described in the accompanying notes to the Unaudited Pro Forma Condensed Combined Financial Statements.

The combined pro forma per share book value as of December 31, 2015 reflects the merger and the debt incurrence as if they had been consummated on December 31, 2015. The combined pro forma per share book value as of March 31, 2016 reflects the merger and the debt incurrence as if they had been consummated on March 31, 2016.

The pro forma information below is presented for illustrative purposes only and is not necessarily indicative of the operating results or financial position that would have occurred if the above referenced transactions had been completed as of the beginning of the periods presented or on the dates presented nor is it necessarily indicative of the future operating results or financial position of the combined company. The financial results may have been different had the companies always been combined. The business of Mitel and Polycom may have performed differently had the merger and the debt incurrence occurred prior to the period presented. In addition, since the Unaudited Pro Forma Financial Information has been prepared based on preliminary estimates of acquisition consideration and fair values of assets acquired and liabilities assumed, the actual amounts recorded may differ materially from the information presented. You should not rely on this information as being indicative of the historical results that would have been achieved had the companies always been combined or of the future results of the combined company. This pro forma information is subject to risks and uncertainties, including those discussed in the section entitled “Risk Factors,” beginning on page 38 of this proxy statement/prospectus.

The historical book value per share is computed by dividing total shareholders’ equity by the number of common shares outstanding at the end of the period. The pro forma net income per common share of the combined company is computed by dividing the pro forma total net income of the combined company by the pro forma weighted-average number of common shares of the combined company outstanding over the period. The pro forma combined book value per share is computed by dividing total pro forma shareholders’ equity of the combined company by the pro forma number of common shares of the combined company outstanding at the end of the period. Polycom equivalent pro forma combined per share amounts are calculated by multiplying the pro

 

forma combined per share amounts by 1.31, the number of Mitel common shares that will be exchanged for each share of Polycom stock in the merger. The Polycom pro forma equivalent per share amounts do not include the benefits of the cash portion of the offer consideration.

 

		Historical
		Mitel				Polycom				Unaudited Mitel Pro forma Combined				Unaudited Polycom Pro forma Equivalents
Three Months Ended March 31, 2016:
Net income (loss) per common share:
Basic		$	(0.19	)		$	0.02			$	(0.13	)		$	(0.17	)
Diluted			(0.19	)			0.02				(0.13	)			(0.17	)
Book value per share as of March 31, 2016			4.84				7.89				6.03				7.90
Year Ended December 31, 2015:
Net income (loss) per common share:
Basic		$	(0.18	)		$	0.52			$	(0.41	)		$	(0.54	)
Diluted			(0.18	)			0.51				(0.41	)			(0.54	)
Book value per share as of December 31, 2015 (1)			5.09				7.94				N/A				N/A

 

(1)

Pro forma book value per share as of December 31, 2015 is not meaningful, as the estimated pro forma adjustments were calculated as of March 31, 2016.