BCE buyers finalize funding

Fri Jul 4, 2008 5:02pm EDT
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By Wojtek Dabrowski

TORONTO (Reuters) - Announcing what it said were "essential milestones" allowing the world's largest leveraged buyout to go ahead, BCE Inc BCE.TOBCE.N said on Friday that its buyers had finalized funding and were sticking to their C$34.8-billion ($34.1 billion) purchase price.

In an announcement that was in stark contract to news of buyouts that have crumbled in the United States, the Canadian telecom giant said it expected its going-private deal to close by December 11.

BCE shares jumped 13 percent to C$39.64 on the Toronto Stock Exchange, reflecting investor relief that the deal would close at the original price of C$42.75 per share. The closing will be some six months later than previously targeted.

"It's been a tough market for financing in the credit markets," said MacDougall, MacDougall & MacTier analyst Troy Crandall. "It was quite impressive that they did get the financing put together as quickly as they did."

BCE, traditionally known for steady dividend payouts, said it will not pay dividends on its common shares before the deal closes, although it will continue to pay dividends on its preferred shares.

That follows on from an announcement on Monday that BCE was skipping its second-quarter dividend, worth about C$294 million, as it works to complete the deal.

The reverse break fee payable by the buyers has increased to C$1.2 billion from C$1 billion.

"Since the dividend has been effectively canceled, it is likely that the...dividend payments between now and close (worth between C$588-C$882 million) have been offered as a concession for the banks to complete the deal," National Bank Financial analyst Greg MacDonald wrote in a note to clients.   Continued...

<p>A sign is seen outside the offices of BCE Inc., Canada's largest telecoms group, in Montreal, May 21, 2008. REUTERS/Shaun Best</p>