PrefBlog

BCE has announced:

that the company has entered into a definitive agreement for BCE to be acquired by an investor group led by Teachers Private Capital, the private investment arm of the Ontario Teachers Pension Plan, Providence Equity Partners Inc. and Madison Dearborn Partners, LLC. The all-cash transaction is valued at C$51.7 billion (US$48.5 billion), including C$16.9 billion (US$15.9 billion) of debt, preferred equity and minority interests. The BCE Board of Directors unanimously recommends that shareholders vote to accept the offer.

Under the terms of the transaction, the investor group will acquire all of the common shares of BCE not already owned by Teachers for an offer price of C$42.75 per common share and all preferred shares at the prices set forth in the attached schedule.
….
                            SCHEDULE A
                   BCE PREFERRED SHARES – PURCHASE PRICES

    The cash considerations payable to the holders of the preferred shares
    are as follows:

    ————————————————————————-
        First Preferred Shares               Consideration Per Share
    ————————————————————————-
              Series R                             $25.65 (*)
              Series S                             $25.50 (*)
              Series T                             $25.77 (*)
              Series Y                             $25.50 (*)
              Series Z                             $25.25 (*)
              Series AA                            $25.76 (*)
              Series AC                            $25.76 (*)
              Series AE                            $25.50 (*)
              Series AF                            $25.41 (*)
              Series AG                            $25.56 (*)
              Series AH                            $25.50 (*)
              Series AI                            $25.87 (*)
    ————————————————————————-    (*)Together with accrued but unpaid dividends to the Effective Date.

I’m astounded. I don’t understand why they would pay so much for the preferreds … but there is a note in the press release that states:

The transaction will be completed through a plan of arrangement, which will require the approval of two-thirds of outstanding common and preferred shares, voting as a class.

I will be fascinated to learn more of the legal intricacies which make this a viable option for the purchasers! As it is, it looks like all my gloomy prognostications will turn out wrong. Although, mind you, the preferred shareholders don’t actually have cash money in their pockets yet – and there have been tears shed over similar offers.

BCE has the following preferred shares outstanding: BCE.PR.A, BCE.PR.C, BCE.PR.E, BCE.PR.F, BCE.PR.G, BCE.PR.H, BCE.PR.I, BCE.PR.R, BCE.PR.S, BCE.PR.T, BCE.PR.Y & BCE.PR.Z

Telus has announced:

that it has elected not to submit an offer to acquire BCE as part of the strategic review process announced by BCE on April 17, 2007. The inadequacies of BCE’s bid process did not make it possible for TELUS to submit an offer.

… which could be mere posturing in order to get BCE to change their bid process, a reflection of regulatory problems … who knows? Pick your talking head, pick your explanation.

Ten year bonds for both companies widened 20bp on the news, perhaps reflecting the idea that now both will become LBO targets in shareholder-friendly ( = bondholder-hostile) events. But we will see!

I continue to think that BCE prefs are a crapshoot on credit right now and don’t want anything to do with them! There are, as yet, no words of wisdom from the ratings agencies.

BCE has the following preferred shares outstanding: BCE.PR.A, BCE.PR.C, BCE.PR.E, BCE.PR.F, BCE.PR.G, BCE.PR.H, BCE.PR.I, BCE.PR.R, BCE.PR.S, BCE.PR.T, BCE.PR.Y & BCE.PR.Z