Times Colonist

Supreme Court will hear BCE appeal

Three-judge panel breathes new life into $52-billion takeover of Bell parent


OTTAWA — The Supreme Court of Canada breathed new life yesterday into a $52-billion takeover of the country’s largest telecommun­ications company, BCE Inc., by agreeing to hear an appeal of a court ruling that endangered the deal.

A three-judge panel, by convention, gave no reasons for the decision, which was expedited through the normal process because the private takeover was in danger of falling apart following a May 21 Quebec Court of Appeal ruling.

The Supreme Court has set aside June 17 for the hearing. Each side will have an hour for oral arguments to supplement the written submission­s that must be filed by June 12.

BCE, parent company of Bell Canada, wants the Supreme Court to overturn the lower court conclusion that the leveraged buyout, by an investor group led by the Ontario Teachers’ Pension Plan, was unfair to bond-holders.

The high court’s decision to hear the case is a setback for the bond-holders, who say the debt Bell needs for the privatizat­ion will severely devalue their debentures.

The buyout would add $34 billion to the company’s debt. It has been described as the world’s largest leveraged buyout.

BCE has asked the Supreme Court to extend the closing deadline for the sale to Nov. 30.

The Montreal-based company was saying little yesterday about the Supreme Court’s decision to hear the appeal.

“Failure to complete the proposed privatizat­ion transactio­n could have a material adverse impact on the market price of BCE’s shares,” the company said in a news release.

Following Bell’s setback in the Quebec court, BCE and the buyers said they asked the Supreme Court to hear the appeal because the lower court decision “rewrites Canadian law relating to the duty of Canadian boards of directors to maximize value for shareholde­rs in the context of a change of control transactio­n, as well as to the entitlemen­ts of bond-holders in those circumstan­ces.”

In a written submission filed last week in the Supreme Court, BCE also said that “the decision of the Quebec Court of Appeal will destroy billions of dollars of value for BCE and its hundreds of thousands of shareholde­rs.”

Since the Quebec Appeal Court ruling was released, BCE lost $5 billion in market value, the company said.

The bond-holders had urged the Supreme Court to dismiss Bell’s appeal applicatio­n, arguing the business deal to privatize BCE is not significan­t enough to merit interventi­on by a court that considers matters of “national importance.”

The decision in the Quebec Court of Appeal overturned a lower-court ruling.

The Supreme Court’s decision was announced after the close of financial markets, but in after-hours trading, BCE shares initially rose from a $34.53 US close on the New York Stock Exchange.

The shares closed at $34.65 on the Toronto Stock Exchange, down 40 cents for the day.

The Supreme Court could either render a ruling from the bench on June 17, or reserve its decision.

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