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BCE, Buyers Nail Down Buyout Terms

TSC Staff

Canadian telecom giant BCE(BCE Quote) has at long last sealed the deal that will take it private.

The company announced Friday it had entered into a "final agreement" with the private-equity consortium that agreed to the purchase a year ago. The banks backing the deal -- at $34 billion, the largest leveraged buyout ever -- have given it a green light.

The agreement retains the original purchase price of C$42.75 a share, or about $42.00, but pushes the deal's closing date out until December. It also requires that BCE suspend dividend payments on its common shares until the deal closes, bolstering the company's cash coffers and providing extra security to the lenders.

"The final agreement, with definitive financing now in place, preserves the $42.75 per common share price announced last June, which the Board believes is very much in the best interest of shareholders, the company and Bell Canada, particularly given current capital market conditions," said BCE and Bell Canada Board Chair Richard J. Currie, in a press release.

Like other big buyouts engineered before the credit crisis exploded late last summer, the BCE deal has faced lots of challenges. Lenders are much more conservative than they were at the height of the buyout boom, and there was speculation that the banks financing the BCE deal would back out of it. They reportedly had asked to lower the purchase price.

Another threat came from BCE's bondholders, who had won an appeals court decision that the deal was not in their best interests. Canada's Supreme Court overturned that ruling last month.

The private-equity investor group includes Teachers' Private Capital, the private investment arm of the Ontario Teachers' Pension Plan, Providence Equity Partners Inc., Madison Dearborn Partners and Merrill Lynch Global Private Equity.

BCE shares lost 47 cents in New York Thursday to close at $34.75. The U.S. stock market was closed Friday in observance of the Independence Day holiday.