Friday, March 7, 2008 0 comments ++[ CLICK TO COMMENT ]++

BCE Bondholder Lawsuit Dismissed

Wild day for the monolines again. I'l post my thoughts on Ambac (feeling very melancholic and dillusioned) in some future post, but here is some news on the BCE front.

The Globe and Mail reports that BCE's bondholder lawsuit was dismissed by a judge today.

A Quebec judge has ruled BCE Inc. can proceed with a $34.8-billion buyout by a group of institutional investors led by Ontario Teachers Pension Fund...BCE still has to win approval from Canadian Radio-television and Telecommunications Commission, but it is widely expected that any objections raised by the regulator can ultimately be resolved...

Analysts expect the bondholders to appeal the decision, which will leave the fate of the buyout up in the air for at least another few weeks, but it is difficult to win such appeals...

In a lengthy decision, Judge Silcoff said that that BCE bondholders were sophisticated investors who should have anticipated the risks that BCE might be a target for a leveraged takeover.

“The should have foreseen the risk involved in purchasing these debentures … they should have taken appropriate steps to protect themselves. They chose not to and must accept the consequences of their decisions,” he wrote.


The bondholders really had no merit to their case so I never really expected that to be an issue for the proposed takeover (the CRTC, a body similar to the FCC in Canada, hearing likely won't be an issue either). Instead, the problem has always been bank financing. With Canadian banks also taking some losses in the credit meltdown, the odds of a failure with financing is increasing.

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