Chief justice heads panel on BCE buyout appeal
June 2nd, 2008 | by admin |By Randall Palmer
OTTAWA, June 2 (Reuters) - The chief justice of the SupremeCourt of Canada and two other judges will decide this week onwhether to hear an appeal of a lower court decision that couldderail the C$34.8 billion ($34.8 billion) plan to take BCE Inc.(BCE.TO: Quote, Profile, Research)(BCE.N: Quote, Profile, Research) private.
The high court named Chief Justice Beverley McLachlin andjustices Louis LeBel and Louise Charron as the panel which willmake the decision on the telecom giant’s request to hear itsargument on why the Quebec Court of Appeals ruling was wrong.
The Quebec court had ruled that the deal, the world’slargest leveraged buyout, was unfair to bondholders as it wouldlower the value of their bonds. It said directors must considerbondholders’ interests, not just those of shareholders.
The Supreme Court of Canada has not said when itsthree-judge panel would decide, but it will have to be in thenext few days if it wants to keep to its suggested timetableleading up to a possible June 17 oral hearing.
The first step in that scenario is a June 6 deadline forBCE’s written appeal arguments.
At stake is billions of dollars in shareholder value aswell as the status of the debt of BCE, the parent firm of BellCanada. BCE shares traded on Monday morning at C$34.87 a share,down 18 Canadian cents from Friday’s close and well below theC$42.75 being offered in the buyout.
One group of bondholders noted in their submission to theSupreme Court late on Friday that two rating agencies hadalready downgraded Bell’s debentures from investment grade tojunk status, with an 18 percent fall in market value.
“It is unprecedented for a company to go from an A-levelinvestment grade credit rating to junk status in an LBO(leveraged buyout). It is also the first time in Bell’s historythat its debt has been ranked below investment grade,” theysubmitted.
