Canadian Press, Ryan Remiorz/AP

Bell Canada Subject to Country’s Biggest-Ever Takeover

June 22, 2008 09:00 PM
by findingDulcinea Staff
Canada’s Supreme Court ruled in favor of Bell Canada on Friday, offering a green light for the $35 billion takeover bid by the Ontario Teachers’ Pension Plan.

30-Second Summary

In a landmark decision for all shareholders of Canadian companies, Canada’s Supreme Court granted Bell Canada the right to proceed with the largest buyout in Canadian history.

The banks financing the takeover of BCE will now enter tense negotiations to establish the terms of the deal.

But the credit crisis has put a strain on the deal. On May 16, banks that were financing Teachers proposed takeover slapped the investment consortium with a new set of terms that encompassed more stringent loan restrictions and protection provisions for the lenders, as well as higher interest rates.

A few days later, Bell Canada bondholders won a case in the Quebec Court of Appeals on the grounds that a Teachers-led takeover would saddle bondholders with $32 billion in debt and devalue Bell Canada bonds to junk status. Bell Canada bonds have fallen 20 percent over questions of a buyout.

Regardless of the court’s decision, Bell Canada CEO Michael Sabia is set to retire, potentially setting the telecom adrift.

Headline Link: BCE buyout wins unanimous ruling

Background: Bell Canada takeover timeline

Opinion & Analysis: Potential fallout of Supreme Court ruling

Reference: Official reactions


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