The Supreme Court of Canada has ruled in favour of the $52-billion privatization of BCE, giving the Ontario Teachers’ Pension Plan-led consortium the green light to proceed with the largest-ever leveraged buyout in history.
The Court’s decision was unanimous and its reasons for the decision will be released at a later date.
“We are pleased with the Supreme Court’s decision and are continuing to work to complete an acquisition of BCE,” said Jim Leech, CEO of Teachers’, in a statement.
There had been speculation about the availability of financing from a banking group, but a statement from the banks says the deal will go through as agreed. “The banks expect that the transaction will close in accordance with the definitive agreement between BCE and the sponsors,” says a statement from Citigroup, Deutsche Bank, Royal Bank of Scotland, and Toronto-Dominion Bank. “We continue to negotiate the financing document in good faith with the sponsors and stand behind our original commitment to the transaction.”
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Negotiations between the consortium and the banks funding the buyout were put on hold last month after the Quebec Court of Appeal ruled that the privatization was unfair to bondholders. Bondholders claimed that the buyout would decrease the value of existing debt because BCE’s debt level would rise.
Had the court ruled against Teachers’ and BCE, it would have had important implications on whose interest a board of directors has to consider when selling. BCE’s lawyers had argued that the directors had a duty only to do what is best for the company and its shareholders, not the bondholders.
BCE’s stock jumped on the news, rising as much as 10% in after-hours trading.
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