$35B Buyout of Canadian Telecom Company Dead

Some analysts speculated the banks would try to get out of the deal.

The Toronto-based Ontario Teachers' Pension Plan -- with assets of $108 billion Canadian ($87 billion) in 2007 -- invests and administers the retirement funds for Ontario's 353,000 active, inactive, and retired teachers. U.S.-based Providence Equity Partners and Madison Dearborn Partners are also involved in the proposed buyout.

BCE, which has more than 54,000 employees, had annual revenue of $17.8 billion Canadian ($14.1 billion) in 2007. It had 5.8 million wireless subscribers, 8.64 million phone lines, 1.94 million Internet subscribers and 1.82 million satellite television subscribers in 2006. It is Canada's largest communications company.

New Chief Executive George Cope took over on July 11 despite the deal not closing yet. Cope has refocused the Montreal telecom operator as it faces more intense competition in its wireless and Internet data businesses.

The deal has been in some doubt for a year for a variety of reasons, including the credit crisis and because a court ruling temporally put it in jeopardy. Earlier this year, Canada's Supreme Court overturned a lower court ruling that said the sale of BCE didn't adequately consider bondholders' interests.

Canadian regulators also ordered some of aspects of the deal to change. BCE, the buyers and the banks also re-negotiated the deal in July so that the dividend would be eliminated and the closing would be put off until December.