Banks May Bust BCE Deal
May 19, 2008
In what could be dubbed Clear Channel Part Deux, the investment banks handling the debt for the $52 billion buyout of BCE are attempting to revise the terms on the deal, according to a report in The New York Times.
Lead banks Citigroup, Deutsche Bank and the Royal Bank of Scotland have sent the private equity consortium involved in the deal a list of new terms for the debt that include larger coupons and greater covenant protections.
The private equity buyers, the Ontario Teachers Pension Plan, Providence Equity Partners, Madison Dearborn Partners, Toronto-Dominion and Merrill Lynch, are reportedly considering filing a lawsuit to force the banks to back the deal as is.
All three lead banks, as well as Providence Equity Partners, settled a similar dispute last week involving Clear Channel. The two sides agreed to go ahead with the buyout at a lower price and avoided a trial.
If the deal does not go through, the amount of debt on the speculative-grade calendar would be reduced by $34.4 billion The BCE deal’s demise would eliminate $23.1 billion from the leveraged loan pipeline and $11.3 billion from the high yield bond pipeline, according to Fitch Ratings.
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