Friday, June 20, 2008 2 comments ++[ CLICK TO COMMENT ]++

Supreme Court of Canada Rules In Favour of BCE Shareholders; Deal Likely to Proceed

The Supreme Court of Canada ruled in favour of BCE shareholders, overturning a lower court decision favouring the bondholders. Decision was unanimous and the reasoning is to be given later.

Furthermore, it looks the banks are signalling a positive outcome:

BCE Inc.'s $35-billion sale to Ontario Teachers' Pension Plan can proceed after the Supreme Court of Canada ruled in favour of the takeover. And the banks say they are onside to provide the funding.

“The banks expect that the transaction will close in accordance with the Definitive Agreement between BCE and the sponsors. We continue to negotiate the financing documents in good faith with the sponsors and stand behind our original commitment to the transaction,” said a statement from the banking group. It is led by Citigroup, and includes Deutsche Bank, Royal Bank of Scotland and Toronto-Dominion Bank. They have committed to provide the $32-billion of debt portion needed to fund this sale.


Bank financing can still run into problems but that is the most positive thing I have heard from the banks in a while.

Toronto lawyer James Morton, who represented some debenture holders at the original trial, said the top court clarified an area of securities law that had been muddied by the Quebec Court of Appeal.

“If the owners of the companies had to look after stakeholders such as employees and other people like that, it could have led to vast amounts of litigation and I'm sure that's one of the factors that made the Supreme Court decide the way they did,” he said in the marbled courthouse lobby after the ruling was released.

“The shareholders are the boss and remain the boss.”


If shareholders were not treated as the ultimate owners of a business, it would have seriously eroded property rights in Canada. Shareholders come first. Period. The only exceptions should be in some extreme case involving human rights, death, military secrets, or some such thing.

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2 Response to Supreme Court of Canada Rules In Favour of BCE Shareholders; Deal Likely to Proceed

sc
June 20, 2008 at 11:59 PM

I never liked the bond holders whining but this was a plan of arrangement. OTPP could have played it more like that rather than pure takeover. That being said I completely agree with ruling and profited from it. Of course the bond holders were considered, but the prospective owners didn't want to transfer shareholder rights to creditors. Good on them and good on the Supreme Court and shame on Quebec Court for trying to socialize our capital markets.

June 22, 2008 at 3:00 AM

It's weird that the lower court was an unanimous ruling (if I'm not mistaken.) Assuming this deal goes through (financiing still an issue), it's time to move onto other other arbitrage opportunities...

Are you into risk arbitrage? If you are, what else do you find attractive? What do you think of the Penn National LBO?

Are you from Canada (or track some businesses over here)? Any other Canadian buyouts on your radar screen? If you are, do you know of a good source to find a listing of announced M&A?

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