Private Equity

Report: BCE, buyers arguing break-up fee

Dan O'Shea — Mon, 01 Dec 2008 10:36:59 -0500

Bell Canada Enterprises and the Ontario Teachers Pension Plan- which is leading the BCE buyout plan along with three U.S.-based private equity firms-are haggling over the deal's $1.2 billion break-up fee, according to a report in the Toronto Globe and Mail that quotes unidentified sources. If that sounds like an unheard-of deal termination fee, that's because it is. The acquisition, valued at around $35 billion recently, had been expected to close by Dec. 11. But the closing fell into doubt after independent valuation firm KPMG advised that market conditions and other factors would make it unable to render a solvency opinion.

BCE had disputed the KPMG finding and seemed resolved to proceed, but if this latest report is accurate, the dismantling of the deal could be a more likely outcome.

Also, it may have been long forgotten, but BCE reportedly had not been looking for a buyer until it was coaxed toward a deal agreement by the OTPP and its partners.

For more:
- The Toronto Globe and Mail has the story

Hawaiian Telcom turns to Chapter 11

Dan O'Shea — Sun, 30 Nov 2008 23:01:58 -0500

Hawaiian Telcom has filed for bankruptcy, a move that will not come as much of a surprise to folks who have been following the firm's struggles over the last year. The telco suggested recently that it was looking at bankruptcy as one possible course for dealing with about $1 billion in debt. Hawaiian Telcom last month also missed a $26 million interest payment. The company took on all the debt as part of its $1.6 billion buyout by Carlyle Group a few years ago.

The acquisition has since come to be seen as one of the initial private equity-driven telco buyouts, a trend that continued through this year's debt market crisis. Another deal with big-time private equity involvement--the pending acquisition of Bell Canada Enterprises--appears to be in doubt over financing issues.

The company is 125 years old, founded about two years before the original AT&T. It has about 1,400 employees and 300,000 customers.

For more:
- Forbes has the Associated Press report

BCE deal dealt another blow

Dan O'Shea — Wed, 26 Nov 2008 10:53:18 -0500

Bell Canada Enterprises has been looking to close its $42 billion privatization by the Ontario Teachers Pension Plan and its private equity firm partners by Dec. 11, having said just weeks ago that the deal remained on track to close on schedule. However, BCE today said it was told by independent valuation firm KPMG that "based on its analysis, current market conditions and the amount of debt being used to fund the deal, it won't be able to deliver them [BCE and its buyers] a solvency opinion -- an express condition to closing the merger," according to a report in The Wall Street Journal.

BCE disputes KPMG's conclusion, saying its cash position, operating results and low mid-term debt maturities are working in its favor. There is still a possibility that KPMG could reach a different conclusion by the planned closing date.

The BCE has traveled a tough road already, having overcome previous financing challenges, a bondholder lawsuit and a previous delay in the closing date, among other issues, such as an ongoing shareholder lawsuit related to the delay of dividend payments, not to mention an ongoing worldwide economic crisis that still could worsen.

The WSJ reports that the financing banks for the deal may welcome its potential collapse, none more than Citigroup, which will benefit from a U.S. government bailout plan, but is obligated for about $11 billion in financing for the acquisition.

For more:
- The Wall Street Journal has this report

BCE profit down, acquisition on track

Dan O'Shea — Wed, 29 Oct 2008 18:06:01 -0400

In what probably will be its last earnings report as a public company, Bell Canada Enterprises, parent of Bell Canada, reported a sharp decline in third quarter profit, but indicated that the acquisition of the company was still on track to close Dec. 11. BCE's quarterly profit of $630.2 million (U.S.) was down 28 percent from the same period last year, though costs related to restructuring and job cuts took much of the blame for the dip.

BCE is in the process of being acquired by a group that includes the Ontario Teachers Pension Plan Board and U.S. private equity firm partners. But, it has been hounded by the possibility that financing for the deal could fall apart amid the debt market crisis and related troubled in the banking industry.

For more:
- Forbes has the Associated Press story

PCCW pulls media/telecom stake off market

Dan O'Shea — Mon, 13 Oct 2008 09:03:19 -0400

Hong Kong telco PCCW issued a statement saying it is ending efforts to sell as much as a 45 percent stake in a newly-created telecommunications and media subsidiary because "the recent market downturn has significantly impacted the offers received." Several private equity bidders were thought to have been on the short lists after submitting bids for the unit, HTK Group Holdings (HTKGH).

The Wall Street Journal further reports that banks would not offer the bidders enough flexibility in the financing arrangements to increase their initial offers. PCCW's pull-back comes just days after Huawei Technologies withdrew its mobile handset unit from the auction process, citing unfavorable market conditions. The current environment also may not bode well for Nortel Network's reported desire to sell its Metro Ethernet unit.

In addition, pending carrier deals, such as Verizon Communications's acquisition of Alltel and the private equity buyout of Bell Canada Enterprises, have been shaken by the recent downturn.

For more:
- see this PCCW press release
- read this report at The Wall Street Journal

Tandberg talking to potential buyer

Dan O'Shea — Mon, 18 Aug 2008 09:13:27 -0400

Oslo, Norway, videoconferencing company Tandberg, not to be confused with the Tandberg TV group now owned by Ericsson, is in preliminary acquisition talks with a private equity firm. Tandberg declined to identify the possible suitor. Some reports suggested it could be U.S. private equity firm Silver Lake. That firm declined comment on the matter to the Financial Times, but it would be interesting on at least two fronts if Silver Lake does turn out to be the suitor.

First, former longtime Cisco Systems executive Charlie Giancarlo has been on board at Silver Lake since last year. Giancarlo's former employer has been carrying the torch for telepresence, the latest evolution in videoconferencing, for some time. Now, carriers and corporate enterprise alike are taking notice of telepresence, and the marketing for telepresence gear is heating up. Tandberg announced its own telepresence efforts earlier this year.

Second, Silver Lake owns enterprise-focused Avaya, and a Silver Lake acquisition of Tandberg could result in these occasional competitors working more cooperatively.

For more:
- see this story at The Financial Times
- read this report at Light Reading

Related articles:
Giancarlo left Cisco for Silver Lake late last year. Giancarlo report
Tandberg has a telepresence partnership with Nortel. Tandberg report

BCE deal partner aiming to raise more money

Dan O'Shea — Thu, 17 Jul 2008 10:32:52 -0400

Madison Dearborn Partners, one of the private equity firms involved in the pending acquisition of Bell Canada Enterprises, is attempting to raise about $10 billion for its buyout fund, but had raised just $4 billion as of mid-April, according to The Deal.com. This report and others point out that times are tough for private equity firms looking to build up their funding coffers and pursue more leveraged buyouts.

The BCE deal has been viewed as the largest leveraged buyout in history, and was announced last summer at what some people thought was the tail end of heavy pursuit of telecom acquisitions by private equity firms. Several P.E.-funded deals were announced in the year or so leading up to late 2007, and some industry observers predicted the deal flow to slow this year. Still, Windjammer Communications, a joint venture involving a private equity firm, just acquired systems from Time Warner Cable.

For more:
- read this story at The Deal.com

Related articles:
The BCE buyout is scheduled to close in December. BCE report
Windjammer Communications recently bought cable systems. Windjammer report

Windjammer Communications picks up some Time Warner rural customers

Jim O'Neill — Mon, 14 Jul 2008 08:39:21 -0400

Windjammer Communications—a combination of private-equity firm MAST Capital Management and Communications Construction Services (CCS)—is now the proud owner of 80,000 former Time Warner Cable subscribers spread across some 125 head-ends in 25 states … at least it will be once the deal is wrapped in the fourth quarter.

TWC said it had reached agreement to sell Windjammer several small systems that had been for sale since spring in what it described as non-strategic areas. Terms of the deal weren’t released, but Time Warner said its second-quarter results will show a $45 million loss on the sale.

Cable executives familiar with the deal told Multichannel that the systems, while likely in need of upgrades, have the potential to offer high-speed data and telephony: The 120,000 revenue-generating units average only about 1.5 services per customer. “That means that they’re not offering much high-speed data and no voice service,” one executive said.

Time Warner Cable said CCS specializes in providing voice, video and data services to military personnel and supplies service to more than 200 military facilities in the continental U.S. and Hawaii.

For more:
- See the Multichannel news story

Related articles:
TWC testing metered Internet Time Warner Cable report
Time Warner spinning off cable unit Time Warner report

BCE acquisition to close in December

Dan O'Shea — Sun, 06 Jul 2008 22:07:58 -0400

The $52 billion Bell Canada Enterprises acquisition, which has faced many hurdles since being announced last summer, is now scheduled to close in December. That represents a postponement of several months for a deal that originally had been scheduled to close this month, but the delay, combined with the recent decision to stop BCE dividend payments, will result in a purchase price that is lower by about $1.5 billion, and terms that are more agreeable to the lending banks involved in the deal.

Four banks are lending about 85 percent of the money that the buyers--the Ontario Teachers Pension Plan and three private equity firms--needed for the acquisition, and in addition to the later closing date and dividend halt, other elements of the lending terms reportedly were changed.

Current BCE CEO Michael Sabia still plans to step down from his job Friday as planned. His successor, George Cope, was chosen several months ago.

For more:
- see this story at The New York Times

Related articles:
BCE's buyers recently saw a major legal hurdle lifted by the Canadian Supreme Court BCE report
BCE president Cope was named late last year to succeed Sabia BCE report

Two BCE execs leave as deal progresses

Dan O'Shea — Wed, 25 Jun 2008 22:36:27 -0400

Bell Canada Enterprises announced that two executives--Patrick Pichette, president of operations, and L. Scott Thomson, executive vice president of corporate development and planning, have elected to leave the company. BCE is in the midst of being acquired by the Ontario Teachers Pension Plan and three private equity firms, a $52 billion deal that had been threatened by a bondholder lawsuit and ongoing debt concerns, but now appears to be moving toward conclusion.

Pichette will become senior vice president and CFO of Google beginning in August, while Thomson becomes executive vice president, finance and CFO of Talisman Energy, effective Wednesday.

For more:
- see this BCE press release

Related articles:
The BCE deal's path was cleared by Canada's Supreme Court last week BCE report
The BCE deal was proposed in July 2007 BCE report

Canadian court opens gate for BCE deal

Dan O'Shea — Sun, 22 Jun 2008 23:56:10 -0400

Canada's Supreme Court has removed a key legal hurdle that had been in the way of the long-debated acquisition of Bell Canada parent firm BCE by the Ontario Teachers Pension Plan and three private equity firms. Without explaining its reasoning, which will apparently come in a court opinion to be issued later, the Canadian high court over-ruled a lower-court decision that would have blocked the $52 billion deal from proceeding. The lower court ruling had resulted from a lawsuit that had been filed by Bell Canada bondholders who said the amount of debt in the deal agreement killed the value of their bonds.

Though the Supreme Court decision helps the buyers, the acquisition still has more hurdles to overcome, as the buyers still are negotiating with banks for financing after the banks tried to toughen up the financing terms. The banks involved issued a statement late Friday articulating their intent to help get the deal done, but they likely still will push for a lower deal value or other changes.

For more:
- check out this coverage at The Wall Street Journal
- read this post at Canada's National Post

Related articles:
Bell Canada bondholders made their displeasure known last summer Bell Canada report
The BCE acquisition drew tough terms from the banks involved BCE acquisition report

NSN to sell Open Network Transport group

Dan O'Shea — Wed, 11 Jun 2008 09:45:07 -0400

Nokia Siemens Networks is selling its Open Network Transport operation to Belgian private equity firm GIMV for an undisclosed amount of money. The transaction is expected to close during the second quarter.

For more:
- see this press release

Related articles:
Siemens at one point was unhappy with NSN's progress NSN report
NSN last year acquired Atrica NSN report

Bell Canada fights time, financing challenges to deal

Dan O'Shea — Wed, 28 May 2008 17:32:54 -0400

Bell Canada filed a request with the Supreme Court of Canada this week to expedite the top court's hearing of Bell Canada's appeal of a lower court ruling that blocked the $52 billion takeover of the company. The Quebec court of Appeals had ruled the deal was not fair to Bell Canada bondholders, who had filed a lawsuit months earlier attempting to block the deal. If the Supremes accept the request for speedier attention, the case could be heard by June 17, with the possibility of a ruling before the June 30 deadline Bell Canada need to meet to get the buyout done.

Legal challenges are not the only challenges the deal faces, of course. The banks that were to supply financing terms for the acquisition want to renegotiate those terms with the buyers--the Ontario Teachers Pension Plan and three private equity firms.

For more:
- see this story at Information Week

Related articles:
- Bell Canada bondholders became riled up last summer, and eventually sued. Bell Canada report
- The Bell Canada deal was stalled by credit market worries last week. Bell Canada report

Bondholder suit ruling heaps burden on BCE deal

Thu, 22 May 2008 06:59:56 -0400

The private equity led buyout of BCE, owner of Bell Canada was dealt another blow as an appeals court in Quebec ruled the deal is unfair to BCE bondholders and should be blocked. In a case of exquisite timing, the court ruled on a lawsuit filed months ago by the bondholders just as BCE's prospective buyers--Ontario Teachers' Pension Plan, Madison Dearborn, Merrill Lynch Global Private Equity and Providence Equity--were trying to meet with banks to overcome the onerous credit terms presented to them. Those financial requirements were already casting some doubt on the deal, and this ruling, despite the buyers' intent to appeal to the Supreme Court of Canada, present an additional threat to the acquisition, which originally was valued at almost $52 billion.

For more:
- see this story at The Wall Street Journal

Related articles:
- The BCE deal already has been threatened by banks weary of the credit crisis. BCE report
- Bell Canada sale gets OK Bell Canada report
- Bell Canada's Q4 was flat Bell report

Credit crunch hangs up Bell Canada buyout

Tue, 20 May 2008 06:59:56 -0400

Bell Canada's hoped-for $51.8 billion buyout has been put on hold again while the banks in the deal look for better terms, wary of rising interest rates.

The Royal Bank of Scotland, Citigroup and Deutsche Bank led a group of banks that in June agreed to finance the takeover of Canada's largest telecom by a consortium including the Ontario Teachers' Pension Plan, Madison Dearborn, Merrill Lynch Global Private Equity and Providence Equity.

But a discordant credit market has caused the banks to look askance at the deal.

For more:
- See the story at The Times
- And, check out the New York Times article

Related art ices:
- Bell Canada sale gets OK Bell Canada report
- Bell Canada's Q4 was flat Bell report

3Com names China-based CEO, U.S. COO

Wed, 30 Apr 2008 06:59:55 -0400

3Com has named a new CEO who will be based in China and a new COO who will be based in the U.S. This intriguing development comes not long after 3Com withdrew from U.S regulatory consideration an acquisition proposal that would have seen China's Huawei Technologies and private equity firm Bain Capital buy 3Com for $2.2 billion. Robert Mao, who had been a director of 3Com and previously had worked for the company, is the new CEO, and Ron Sege, a longtime telecom veteran who most recently led Tropos Networks, is the new COO.

3Com's potential acquisition fell apart over concerns from the Committee on Foreign Investment in the U.S. that a Huawei, a firm connected to the Chinese government, would own at least 16% of 3Com. Since then, The Wall Street Journal reports, 3Com insiders, including Mao, have been buying up 3Com stock.

For more:
- see this report in the Wall Street Journal

Related articles:
3Com shareholders last month approved the acquisition offer 3Com report
Huawei, Bain in $2.2 bln 3Com LBO 3Com report

Vonage lands $215 million in debt financing

Mon, 28 Apr 2008 06:59:54 -0400

VoIP service provider Vonage said it has lined up $215 million in debt financing from a private third party which will help the company refinance much of its current debt of more than $253 million. Further details are still unclear, such as who the private funding party is and what the terms of the financing agreement are. The arrangement comes after a year in which Vonage settled several patent lawsuits but continued to show strong customer growth and movement toward profitability.

For more:
- read this story at Light Reading

Related articles:
Vonage touted some new offerings at this year's CES. Vonage report
Vonage renegotiating debt terms Vonage report

NuLink newest cable TV market entrant

Thu, 24 Apr 2008 06:59:53 -0400

Private equity firm Halyard Capital and cable TV industry veteran John Brooks have partnered to acquire the cable TV assets of Georgia's Newman Utilities for about $70 million. Brooks is currently in charge as chairman and CEO, and the company, which serves Coweta County, Ga., has been renamed NuLink. Cable TV industry start-ups and re-boots are not all that common, so it will be interesting to see what NuLink does next--it is already planning a push into video on demand and telephony.

For more:
- read this story at Light Reading's Cable Digital News

Wire One deal beefs up BT's U.S. presence

Fri, 11 Apr 2008 06:59:57 -0400

BT is acquiring Wire One Holdings, a U.S.-based videoconferencing service provider that will be brought into the U.K. telco's Quincy, Mass.-based BT Conferencing unit. BT purchasing the company for an undisclosed amount from private equity firm The Gores Group. Wire One, has a London office and extensions into the European market, but it is primarily expected to supply much of the videoconferencing capabilities that BT pitches to corporate enterprise customers in the U.S. It has offices in Ohio, Colorado and elsewhere, with network operations centers in Colorado and London. Telepresence is the latest buzzword in videoconferencing, and Wire One recently was authorized to sell and support Cisco Systems Telepresence gear and services.

For more:
- read this press release at NewsBlaze.com

Related article:
- BT recently acquired other enterprise firms, like Lynx Technology. BT report

Bell Canada sale earns regulatory stamp

Fri, 28 Mar 2008 07:59:57 -0400

The Canadian Radio/TV and Telecommunications Commission has approved the acquisition, with conditions, of Canada's BCE and subsidiary incumbent telco Bell Canada. The CRTC agreed to the $52 million leveraged buyout proposed by the Ontario Teachers Pension Plan and three U.S. private equity firms based on the conditions that the pension fund will get to name two of the five member of the company's executive committee and that they will be Canadians.

The deal now must navigate an increasingly treacherous financing landscape. The approval of this buyout comes the same week that the $19 billion acquisition of media giant Clear Channel Communications hit the skids over a dispute between the buyers and the lending banks.

For more:
- read this story at Canada's Financial Post

Related articles:
- Bell Canada last month reported flat revenue for the fourth quarter of 2007