The Supreme Court of Canada, in a unanimous ruling in Ottawa today, overturned a decision of the Quebec Court of Appeal that had derailed BCE’s plan for having ignored the interests of the company’s bondholders.
The decision removes one hurdle to closing the purchase of Montreal-based BCE, Canada’s biggest phone company, by Ontario Teachers’ Pension Plan and U.S. private-equity firms. Completion isn’t certain, as banks have sought to renegotiate terms of debt in LBOs amid a contraction in credit markets, seeking higher interest rates and tighter loan restrictions, and derailing more than 60 buyout plans since last year.
DBRS has announced:
its current ratings on BCE Inc. (BCE or the Company) and Bell Canada continue to remain Under Review with Negative Implications following today’s unanimous judgment by the Supreme Court of Canada which will allow the planned privatization to proceed.
The ratings were originally placed Under Review with Negative Implications on April 17, 2007. This was maintained after the privatization plan was announced on June 30, 2007. The plan is led by an investor group that includes Teachers’ Private Capital, a division of the Ontario Teachers’ Pension Plan Board, and includes Providence Equity Partners Inc. and Madison Dearborn Partners, LLC. Subsequently, Merrill Lynch took up an equity commitment. Collectively the sponsors have committed to invest $7.75 billion in equity to fund this transaction.
DBRS will maintain its review while it continues its discussions with BCE and the investor group. As a closing date approaches, DBRS will resolve this status with rating guidance based on the final terms of the transaction and its new Leveraged Finance rating methodology.
DBRS’s new methodology uses the default rating and a new Recovery Ratings scale to determine an instrument rating for each piece of new and existing indebtedness. The resulting ratings will likely cover multiple notches, ranging well above and below an Issuer Rating that could be in the lower end of the BB range.
[…] June 23 will be a most interesting day. We can expect BCE issues to skyrocket, as the chances of the deal closing have increased; to the extent that (i) the money that may be received by BCE preferred shareholders will the […]