One of the biggest upheavals in Canadian telecom history is one step away now that Industry Canada has approved the privatization of Bell Canada Enterprises.
All that stands in the way of the purchase by investor group led by Teachers’ Private Capital, the private investment arm of the Ontario Teachers’ Pension Plan, and several U.S. partners — Providence Equity Partners Inc., Madison Dearborn Partners, LLC, and Merrill Lynch Global Private Equity — is an appeal by debenture holders to be heard this month by a Quebec court.
That hearing is scheduled for April 28 and scheduled to last three and a half days.
Industry minister Jim Prentice had to rule on whether BCE would be considered a Canadian company under federal regulations with the new ownership structure.
In a letter released today Prentice said once the government has received final documents confirming BCE has made changes to ensure the conglomerate is not controlled by non-Canadians final approval of the deal will be made.
These changes are conditions ordered last month by the CRTC: That the quorum of Bell’s board of directors, the executive committee and the compensation committee will be formed by a majority of Canadians who will be independent from the non-Canadians shareholders; that the definition of “Independent” will be reinforced and will apply to Teachers’ designees, the CEO and the independent directors; that the quorum at shareholders’ meetings will require that a majority of the voting shares represented at the meeting will be held by Canadian shareholders; and that the threshold for veto over major decisions will be raised to $150 M.
Aside from the Quebec appeal court, the only other possible obstacle to the deal being completed is that one or more of the lenders gets cold feet. The Teachers’ group has offered $42.75 a share, but the listed share price has dropped to about $36. 50since the deal was first announced. That has prompted speculation on the business pages of daily newspapers that with money tightening up the partners may not be in wholehearted support of the arrangement. So far, however, the equity firms and Teachers’ have been mum.
They have also been mum on what direction they’ll put Bell on once they have control. We asked some experts for recommendations, which can be found here.