Thursday, May 22, 2008

NYTimes: Quebec Court Blocks Bell Canada Deal - Mergers, Acquisitions, Venture Capital, Hedge Funds -- DealBook - New York Times

"Is there any doubt now that the sale of Bell Canada is in trouble?
The Quebec Court of Appeal late Wednesday overturned a lower court ruling that approved Bell Canada’s takeover by an investor group, a decision that could potentially stymie the $51.8 billion leveraged buyout.
The decision came after bondholders in the telecommunications giant sought to block Bell Canada’s sale, arguing that the extra debt that the company would incur would harm investors in its debt.
It is only the latest development to bedevil the buyout, the largest on record. Already, the banks backing the deal have sought to renegotiate their lending terms, setting up a potential showdown between the lenders and the buyers, led by the Ontario Teachers’ Pension Plan.
In its decision on Wednesday, after the markets closed, the Quebec Court of Appeal sent the bondholders’ case back to the Quebec Superior Court, which had ruled in Bell Canada’s favor in March. Among the bondholders in the suit are a mutual fund arm of the Canadian Imperial Bank of Commerce and Manulife Financial, according to The Globe and Mail.
“The failure of BCE to present evidence on this issue precludes the Court from determining whether or not it is possible,” the court said in its decision, referring to Bell Canada’s parent, Bell Canada Enterprises. “BCE must bear the consequence of its failure to attempt to discharge this burden.”"

Providence Equity Partners
Recent buyout fundraising: $11 billion

Description: When it opened in 1990, Providence was a quiet niche player that made big money on small media and telco deals. Fellow buyout firms took notice when Providence invested $63 million in VoiceStream Wireless (later renamed T-Mobile) in 1992, then sold it to Deutsche Telekom in 2000 for 19 times its investment. Providence has been on a roll - its reported rate of return is 70 percent. A nonstop cash influx and new offices in New Delhi and Hong Kong should calm limited partners concerned about smaller stakes in pricier club deals and rising multiples in the firm's sectors in the U.S.

Boldface advisors: Former FCC chairman Michael Powell.

Fun fact: Rhode Island-based CEO Jonathan Nelson takes the firm on an annual ski trip to Alta, Utah.

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