BCE buyout in trouble, banks seek new terms: source

By Jessica Hall

PHILADELPHIA (Reuters) - The $34.8 billion (C$34.8 billion) buyout of BCE Inc (BCE.TO)(BCE.N) has become more questionable as the banks funding the deal have sought to renegotiate the financing terms, a source familiar with the situation said on Monday.

The banks behind the buyout of BCE, Canada's largest telecommunications company and operator of Bell Canada, submitted new financing terms to the buyout group on Friday, the source said.

The new set of terms contained higher interest rates and other "onerous" conditions, the source said. Additional details were not immediately available.

The New York Times said the new terms submitted by the banks included higher interest rates, tighter loan restrictions and protections that far exceeded the original terms. Negotiations between the buyout group and the banks lasted all weekend, according to the report.

The newspaper quoted one executive who read the revised terms as saying: "It's patently obvious that the banks have no intention of closing the deal."

The efforts to revise the deal echo the recent battle and lawsuits surrounding the buyout of radio operator Clear Channel Communications Inc (CCU.N).

Clear Channel agreed last week to lower its takeover price to $17.9 billion from roughly $20 billion as part of a legal settlement between its buyers and several bank lenders. The banks involved in the BCE deal were part of the lending group for Clear Channel.

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