BCE Shareholders to Vote on Buyout

BCE Inc. (Bell Canada) (NYSE/Toronto: BCE) has called a special shareholder's meeting scheduled for September 21, at which time shareholders will vote on the privatization bid by the Ontario Teacher's Pension Plan and its private equity partners, Madison Dearborn Partners and Providence Equity Partners .

The shareholder vote is the smallest of the hurdles that must be cleared before the deal becomes official. The Ontario Teacher's Pension Plan board would pay a 40 percent premium on the average share price before BCE announced that it was pursuing strategic alternatives. (See BCE in Privatization Talks and Bell Canada Goes Private.) It seems very unlikely that shareholders would reject such a payout.

Instead, the challenge will be getting investors to buy up all the debt that the advising banks will need to sell in order to fund what is one of the largest leveraged buyouts in history. (See Telus Still a Factor in Bell Canada Buyout.) BCE continues to reiterate confidence that it will clear this hurdle, but it is possible the company has no idea how bad the credit market really is.

The bid to take BCE private has been a rollercoaster ride from the start. It had first denied rumors that it was in takeover talks back in late March only to publicly announce that it was doing just that a few weeks later. (See Bell Canada Denies Takeover Rumors and BCE in Privatization Talks.)

Finding a buyer was a tricky process too, since Canadian regulations prevent any foreign company from having a controlling interest in any Canadian company. This restricted the deep pockets of U.S. private equity firms from being anything more than a strategic partner in any deal.

Canada's second largest telco, Telus Corp. (NYSE: TU; Toronto: T) would later emerge as the front runner to acquire BCE only to drop out of the bidding at the last minute. (See Telus, Bell Canada in Takeover Talks and Telus Won't Bid for BCE.)

— Raymond McConville, Reporter, Light Reading

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