BCE shares down on concerns over deal

BCE 3-month TSX chart

Shares of BCE Inc. retreated Tuesday amid reports of a possible rift between the group buying the telecommunications giant and the bankers backing the deal.

BCE slipped $1.42, or 3.6 per cent, to $37.40 on investor worries the deal could be on the rocks. The stock dipped as low as $36.91.

Over the weekend, the New York Times reported that Citigroup, Deutsche Bank and Royal Bank of Scotland want new lending terms on the proposed $51.7-billion takeover of BCE by a group led by the Ontario Teachers' Pension Plan.

The Teachers'-led group is offering $42.75 a share for BCE.

In a published report, Teachers' CEO Jim Leech wouldn't comment on any negotiations with its lenders, but said he expects everyone will honour their commitments.

The banks are reported to be pushing the buying group to lower the deal's purchase price and agree to new higher interest rates, given the current uncertainty in the credit market.

"A lot of indications from the market are that just because there's a price negotiation doesn't mean the deal is going to die," said Heidi Moore, who writes for the Wall Street Journal's Deal Journal blog.

"There's a lot of reason to believe that people will be able to come to what they might call a paid-sharing agreement — take a price cut or perhaps some concessions on the debt financing," she told CBC News.

BCE has said it still expects the deal will be completed by the end of June.

One analyst — Desjardins Securities' Joseph MacKay — said in a note that a lower price might hold up the closing date of the takeover until September and lead to another vote by shareholders.

In another development related to the takeover, BCE said a Quebec Court of Appeal decision on complaints from Bell Canada bondholders will be made public on May 21 at 7 p.m. ET. The decision will be posted on BCE's website.

In March, a Quebec Superior Court dismissed the bondholders' lawsuit that the takeover arrangement treats them unfairly. The bondholders appealed that decision.

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