Monday, May 19, 2008

BCE shares fall on report saying buyout in trouble

BUSINESS WEEK - Shares of BCE Inc., the parent of Bell Canada, declined Monday following reports that its proposed $52 billion takeover by an investor group led by the Ontario Teachers' Pension Plan was in trouble. Citing unnamed people on both sides of the deal, the New York Times reported Monday that the banks that have committed to finance the deal wanted to re-negotiate the lending terms. Bill Fox, a spokesman for BCE, wouldn't comment on whether the banks are trying to re-negotiate the terms, but he said the company still expects the deal to close before the end of the second quarter.

"We have an agreement," Fox said. "I'm not going to comment on any aspect of the work being done to close the transaction. We're working to close on the basis of the terms set out in the agreement."

BCE's is not the first private equity deal to be affected by the credit crunch. Earlier this month, Clear Channel Communications Inc. agreed to take a lower price and slightly higher interest rates to settle a dispute with its lenders and allow its buyout to proceed. The BCE offer, valued at about $52 billion, includes debt, preferred equity and minority interests. According to the New York Times report, the banks backing the deal sent revised terms to the investor group, and these terms included higher interest rates, tighter loan restrictions and stronger protections for banks. The negotiations surrounding the deal, the report said, started to fray late Friday. Citigroup spokeswoman Danielle Romero-Apsilos declined to comment, saying it's too early to discuss what took place over the weekend regarding the BCE deal. Deborah Allen, a spokeswoman with Ontario Teachers Pension Fund, said they can't comment on discussions with the banks or BCE but said "we expect everyone will honor their commitments and we look forward to closing the transaction." Shares of BCE fell $2.02, or 5.2 percent, to $36.79 in afternoon trading. In the past 52 weeks, the stock has traded between $32.94 and $44.59.

No comments: