DEALTALK-BCE's banks and buyers value money over reputation

Mon Jun 23, 2008 10:54pm BST
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By Jessica Hall

PHILADELPHIA, June 23 (Reuters) - At the end of the day for Wall Street, the only thing that matters is money.

Canadian telecommunications company BCE Inc (BCE.TO: Quote, Profile, Research) (BCE.N: Quote, Profile, Research) may have won a legal victory for its $34.1 billion takeover, but the banks funding the deal have asked for significant financial concessions that could still jeopardize the deal, sources familiar with the situation said on Monday.

The banks have sought deeper economic concessions, including the addition of safeguards on the debt agreements or more lucrative terms on lending the money, sources said. The banks also have actively considering walking away from the deal, the sources said.

BCE stock and bond prices on Monday reflected uncertainty about the deal as investors weighed the positive news of the Supreme Court of Canada decision, backing the company against a group of bondholders, against the risk of renegotiated terms.

"All options are on the table. Everything you would normally consider is being considered -- sticking with the deal, changing the terms, or walking away. It's all still very much up for discussion," said one source who declined to be named.

On Friday, the four banks financing the debt portion of the deal said they stood behind their original commitment. The banks, which include Citigroup (C.N: Quote, Profile, Research), Deutsche Bank (DBKGn.DE: Quote, Profile, Research), Royal Bank of Scotland (RBS.L: Quote, Profile, Research) and Toronto-Dominion Bank (TD.TO: Quote, Profile, Research), declined to comment on Monday.

That public statement may be the banks' intention and goal, but "does not reflect the negotiations behind the scenes," a second source said.   Continued...

 
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