CANADA STOCKS-TSX drops as big BCE deal in jeopardy

Wed Nov 26, 2008 11:37am EST
 
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

* BCE deal in doubt, shares drop 37 percent

* Energy group ekes out small gain as oil price rises

* National Bank of Canada warns of further ABCP charges

TORONTO, Nov 26 (Reuters) - The Toronto Stock Exchange's main index dropped 1.7 percent on Wednesday as the big leveraged buyout of BCE (BCE.TO: Quote) looked to be in jeopardy, while a gloomy corporate and economic outlook weighed on sentiment.

Shares of BCE, Canada's biggest telecom company, sank about 37 percent to C$24.32 after it said the world's largest leveraged buyout may be in jeopardy. [ID:nN26331920]

BCE, which accounts for about 3.5 percent of the index and was the most heavily traded stock on Wednesday, said that it was unlikely to close the C$34.8 billion deal after its accountants said that the company that would emerge from the buyout would not pass a solvency test because of its huge debt load.

"I don't know what they might do to put some breath in this and try to keep this thing alive. I don't think the bankers will negotiate after this to be perfectly honest. They could reprice it but I don't think that it will happen," said Steve Ibel, an institutional equities trader at Beacon Securities, in Halifax, Nova Scotia.

"I'm surprised the Canadian markets aren't being pushed down a little bit more...But oil and gold, materials are buffering some of the negative BCE impact."

The news dragged the index's telecoms group down more than 11 percent. BCE's main rival, Telus (T.TO: Quote), was down 5 percent at C$36.90.   Continued...