PrefBlog

BCE gyrations continue:

Citigroup Inc. and Deutsche Bank AG, lead lenders on the C$52 billion ($42 billion) acquisition of BCE Inc., have indicated they are unwilling to fund an alternative proposal that would keep the phone company publicly traded, according to two people familiar with the matter.

Private-equity firms had proposed investing C$8 billion to C$10 billion in preferred securities in lieu of the original leveraged buyout. The alternative transaction hinged on financing from the banks backing the LBO, which are opposed, according to the people, who asked not to be named because the discussions are private.

Golly, there’s a surprise, eh? It may be that the entire proposal was simply lawsuit-avoidance grandstanding … but who knows? BCE denies the rumours:

issuing a statement in response to certain rumours reported in the media regarding a possible minority investment in the company by some or all of theinvestor group led by Teachers’ Private Capital, the private investment arm ofthe Ontario Teachers’ Pension Plan, and affiliates of Providence EquityPartners Inc., Madison Dearborn Partners, LLC, and Merrill Lynch GlobalPrivate Equity.

While it is BCE’s policy not to comment on rumours or speculation, in theinterest of its shareholders, BCE is today confirming that no such offer has been made to the company.

The company continues to work with KPMG and the Purchaser to seek tosatisfy all closing conditions under the June 29, 2007 Definitive Agreement,as amended.

The press release has “legal advice” written all over it. It is not clear to me just what the precise, legally justifiable, meaning of “no such offer has been made” really means. To my untrained eye, it could mean ‘They haven’t actually signed anything yet’.

There is continued muttering that Bernanke’s Big Mistake was Lehman:

The more than half a million U.S. jobs lost in November were the latest in a drumbeat of dire economic data that may have been triggered by the Federal Reserve’s decision in mid-September to allow Lehman Brothers Holdings Inc. to fail, economists and bankers said.

“It’s the collapse heard around the world,” said Ellen Zentner, a senior economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. “It’s probably one of the worst decisions the Fed ever made — to save everybody else but Lehman.”

Bernanke has said he won’t do it again. Assiduous Readers will remember my earlier remark:

The only mistake so far, I think, is allowing Lehman to fail … but neither I, nor any responsible commentator I know of, dreamed at the time that the bankruptcy would have such enormous systemic effects.

Across the Curve passes on some HSBC commentary on the jobs number. HSBC expects FOMC to cut to zero December 16.

Accrued Interest heaps scorn on the NY Port Authority for setting themselves up for a failed bond issue.

PerpetualDiscounts gained slightly as volume continued high. The weighted-average pre-tax bid-YTW of the PerpetualDiscount Index is now 8.01%, equivalent to 11.21% at the standard equivalency factor of 1.4x. This may be compared to long Corporates at 7.50%, implying a still-astonishing Pre-Tax Interest-Equivalent spread of 371bp.

There were sixty-eight index-included $25-pv-equivalent issues trading over 10,000 shares today

This entry was posted on Saturday, December 6th, 2008 at 2:08 pm and is filed under Market Action. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.