An unexpected court ruling threw a wrench into a pension fund's acquisition of telecom giant BCE on Thursday, in what would be the biggest takeover in Canadian history, and sent its shares plummeting.
The Quebec Court of Appeal said in its decision late Wednesday that BCE’s US$51.7 billion sale to an investor group led by the Ontario Teachers’ Pension Plan was unfair to its bondholders.
BCE must now think of a way either to appease its bondholders or have the Quebec ruling overturned by the Supreme Court of Canada — but no later than June 30, the deadline to complete the transaction.
The court ruling rattled investors, pushing BCE shares down 12 percent to US$33.10 in late Toronto trade, well below the US$43.36 sale price offered by the Ontario Teachers Pension Plan and its US partners Providence Equity, Madison Dearborn, and Merrill Lynch.
Bondholders welcomed the court decision, saying that BCE had unfairly overlooked their interests and hurt them in a bid to get the best possible price for shareholders.
The appellants, including Manulife Financial and Sun Life Assurance, as well as Canadian banks CIBC and Toronto Dominion, hold US$1.4 billion worth of BCE debentures, out of a total of US$5.2 billion worth of outstanding bonds maturing after 2010.
In a statement, BCE said it would seek an expedited hearing at Canada’s high court to try to overturn the ruling.
Martine Turcotte, BCE’s chief legal officer, said the judgment “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 bondholders in those circumstances.”
“We believe the Supreme Court of Canada should reverse this decision,” she said.
Analysts expressed doubt that the agreement could be salvaged, pointing to BCE’s legal woes and to reports that banks funding the purchase of BCE were looking to make changes to the financing terms.
Three of the banks backing the deal — Citibank, Deutsche Bank and the Royal Bank of Scotland — were also part of a group that forced US broadcaster Clear Channel last week to accept a lower purchase bid from two US investment funds.
The New York Times reported on Monday the banks were also pressuring BCE to drop its sale price.
ROLLER-COASTER RIDE: More than five earthquakes ranging from magnitude 4.4 to 5.5 on the Richter scale shook eastern Taiwan in rapid succession yesterday afternoon Back-to-back weather fronts are forecast to hit Taiwan this week, resulting in rain across the nation in the coming days, the Central Weather Administration said yesterday, as it also warned residents in mountainous regions to be wary of landslides and rockfalls. As the first front approached, sporadic rainfall began in central and northern parts of Taiwan yesterday, the agency said, adding that rain is forecast to intensify in those regions today, while brief showers would also affect other parts of the nation. A second weather system is forecast to arrive on Thursday, bringing additional rain to the whole nation until Sunday, it
LANDSLIDES POSSIBLE: The agency advised the public to avoid visiting mountainous regions due to more expected aftershocks and rainfall from a series of weather fronts A series of earthquakes over the past few days were likely aftershocks of the April 3 earthquake in Hualien County, with further aftershocks to be expected for up to a year, the Central Weather Administration (CWA) said yesterday. Based on the nation’s experience after the quake on Sept. 21, 1999, more aftershocks are possible over the next six months to a year, the agency said. A total of 103 earthquakes of magnitude 4 on the local magnitude scale or higher hit Hualien County from 5:08pm on Monday to 10:27am yesterday, with 27 of them exceeding magnitude 5. They included two, of magnitude
CONDITIONAL: The PRC imposes secret requirements that the funding it provides cannot be spent in states with diplomatic relations with Taiwan, Emma Reilly said China has been bribing UN officials to obtain “special benefits” and to block funding from countries that have diplomatic ties with Taiwan, a former UN employee told the British House of Commons on Tuesday. At a House of Commons Foreign Affairs Committee hearing into “international relations within the multilateral system,” former Office of the UN High Commissioner for Human Rights (OHCHR) employee Emma Reilly said in a written statement that “Beijing paid bribes to the two successive Presidents of the [UN] General Assembly” during the two-year negotiation of the Sustainable Development Goals. Another way China exercises influence within the UN Secretariat is
Taiwan’s first drag queen to compete on the internationally acclaimed RuPaul’s Drag Race, Nymphia Wind (妮妃雅), was on Friday crowned the “Next Drag Superstar.” Dressed in a sparkling banana dress, Nymphia Wind swept onto the stage for the final, and stole the show. “Taiwan this is for you,” she said right after show host RuPaul announced her as the winner. “To those who feel like they don’t belong, just remember to live fearlessly and to live their truth,” she said on stage. One of the frontrunners for the past 15 episodes, the 28-year-old breezed through to the final after weeks of showcasing her unique