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.
- The Wall Street Journal has this report
BCE profit was down recently, but the buyout was said to be on track
Canada's Supreme Court removed a hurdle to the deal closing