Judges stick spoke in wheel of BCE takeover

The leveraged buyout of Canada’s largest telecoms group BCE by a consortium led by the Ontario Teachers’ Pension Plan (Teachers) suffered a blow yesterday when the Quebec Court of Appeal overturned a lower court’s decision to allow the CAD51.7 billion (USD51.9 billion) cash and debt deal, reports the Toronto Star. The appeal court found in favour of a group of BCE bondholders which are seeking to block the takeover on the grounds that it lowers the value of bonds by massively raising debts at the company, which owns full-service telcos Bell Canada and Bell Aliant. A panel of five judges ruled that ‘BCE never attempted to justify the fairness and reasonableness of an arrangement that results in a significant adverse economic impact on the debenture holders while at that same time it accords a substantial premium to the shareholders.’ The bondholders claim that BCE’s board did not consider whether the assumption of responsibility to repay CAD34 billion in acquisition debt was in the best interests of the company. BCE said it will try to appeal the case in the Supreme Court. Martine Turcotte, chief legal officer of BCE and Bell Canada, said in a statement: ‘Both the transaction and the issues of law involved are of public importance in Canada. We believe the Supreme Court of Canada should reverse this decision, and allow the transaction to proceed.’ The deadline for completing the deal is set for 30 June 2008.