Canadian Press, Ryan Remiorz/AP

Bell Canada Subject to Country’s Biggest-Ever Takeover

June 20, 2008 09:27 AM
by Anne Szustek
Canada’s Supreme Court is due to rule Friday afternoon on whether the Ontario Teachers’ Pension Plan can privatize the nation’s largest telecom.

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 Links: Supreme Court set to rule on Bell Canada buyout

Background: Bell Canada takeover timeline

Opinion & Analysis: Potential fallout of Supreme Court ruling

Reference: Supreme Court of Canada’s judgment to be rendered in appeal on Bell Canada case


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