BCE Inc. bondholders are opposing an attempt by the company to get a speedy ruling by the Supreme Court of Canada, which is being asked to overturn a lower court decision that has put Canada’s largest corporate takeover in jeopardy.
In a motion filed Monday with Canada’s top court, the bondholders said a June 30 deadline by which the company wants the court to have dealt with the case is “entirely artificial.”
“June 30 was simply chosen by BCE and the purchaser as the date by which they would like to complete the plan of arrangement,” stated the motion. “The agreement specifically contemplates that BCE and the purchaser can extend the June 30 date by mutual consent.”
BCE is seeking to overturn a Quebec Court of Appeal decision to block the $52-billion takeover of BCE by an investor group led by the Ontario Teachers’ Pension Plan. Under the proposed agreement, BCE would become a private company controlled by the Teachers’ group.
The bondholders, including major financial institutions, had sought to block the proposed leveraged buyout of Canada’s largest telecom company. They argued the deal treats them unfairly because it would load the corporation with debt, eroding the security and value of the bonds.
Despite the ruling, Teachers’ has said it remains committed to the deal. The Quebec Court of Appeal ruling is just the latest snag to trip up the deal.
Last week, shares of BCE traded lower over uncertainty over the future of the deal after a report in the New York Times that said banks funding the deal were looking to amend the terms of the financing.
That fuelled investor speculation that the value of the deal could drop, especially after the price to take U.S. radio industry giant Clear Channel Communications Inc. private was reduced last week by about 8% to US$17.9 billion.
Putting additional pressure on BCE’s stock was the fact that the Clear Channel settlement involved some lenders also linked the BCE deal.
