Tuesday, September 16, 2008 5 comments ++[ CLICK TO COMMENT ]++

BCE Sells Off

Anyone thinking of risk arbitrage may want to look at BCE. It's a position I took and the stock has sold off sharply in the last few days. The upside is around 15% to 20% (depending on whether you are looking at the NYSE-listed stock or the TSX one.) It's not clear to me if the sell off is due to forced selling by arbitrage funds (due to margin calls and other problems) or if it is reflective of increased threat of the bank financing falling apart.

I was looking at the management buyout of CKX Inc (CKXE) as well. That's also worth looking at. Again, like BCE, it's not clear if the sell off of CKXE is due to forced selling or increased threat of the deal falling apart.

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5 Response to BCE Sells Off

September 17, 2008 at 10:26 AM

Did you notice who is included as one of the investors.

"The purchase price from an investor group led by Teachers' Private Capital, the private investment arm of the Ontario Teachers' Pension Plan, Providence Equity Partners Inc., Madison Dearborn Partners, LLC, and Merrill Lynch Global Private Equity remained at $42.08 a share, or C$42.75."

September 17, 2008 at 10:47 AM

Yeah but their stake is small... something like $700 million if I'm not mistaken...

Besides, now that BAC took it over, it should be easier to fund it, not harder.

September 17, 2008 at 11:57 AM

BCE @ $32.95 = 27% upside

September 17, 2008 at 12:45 PM

2 things crushing it.

Citi thought to be walking from financing and paying break fee of 1B rather than take mtm hit
BAC could step up for that...

Toronto hedge fund is liquidated and this was a leveraged position and they are selling hard. Also Cdn prime brokers are tightening credit forcing selling.

September 17, 2008 at 1:30 PM

BCE shares continue to tumble

"..some investors may be concerned about rumoured problems facing Citigroup Inc., one of the deal's key lenders."

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