Bankers balking at BCE buyout: report
Three-month BCE trading on the TSX
The leveraged buyout of BCE Inc. could be delayed as the banks that are to finance the $52-billion deal want to revise the terms, according to a report.
The talks could mean the takeover, launched in mid-2007, might not be completed until December, the Globe and Mail said Monday, citing unidentified sources.
Despite the $42.75-a-share offer on the table, BCE has been trading in the $36 to $37 range because of the uncertainty about the deal. It closed down $1.21 at $35.55 in TSX trading Monday.
There has been much speculation that the bankers — Citigroup Inc., Deutsche Bank, Royal Bank of Scotland and the Toronto-Dominion Bank — are concerned about the terms of the deal because of the credit crisis that hit after it was announced last year.
They are lending the buying group the money that will fund most of the transaction.
When the deal was announced, the buyers — the Ontario Teachers' Pension Plan and its U.S. partners, private equity firms Providence Equity Partners Inc., Madison Dearborn Partners and Merrill Lynch Global Private Equity — offered $42.75 a share.
But that price has been seen as too high in the current economic climate. The Globe and Mail said the bankers would be pleased to see the offer drop to $35 to $38 a share.
The bank's last public comment came after BCE won a Supreme Court of Canada decision on June 20, overturning a lower court ruling that said the company had to consider the rights of bondholders in the takeover.
The banks said then that they would "continue to negotiate the financing documents in good faith with the sponsors," the teachers' pension plan and its partners.
BCE's dividend is also a factor in the situation. The company said in early June it would delay making a decision about whether to pay the $294-million quarterly dividend until the end of the month.
Holding up the dividend would leave more cash in the company, providing a level of comfort to the bankers. Shareholders would lose that payout, but would gain the premium for their stock.
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