A holiday hasn't protected BCE shares in Canada. It's Victoria's Day today, but BCE shares fell 5% on the New York Stock Exchange on news that the financing parters in the deal are looking to renegotiate the rates to which they previously committed. With $51.8 Billion at stake, this represents the biggest proposed leveraged buyout (LBO) deal ever and it's no wonder that these second-thoughts have investors running.
The risk in such a deal is obvious in even optimistic market conditions; with the current state of the economy in a less than optimal position, banks are working to take-on only the best loans, which has worked to keep most Venture Capitalists scrambling for alternative deals. News of the BCE LBO was news in an of itself and news of its possible insecurity even more so.
The Ontario Teachers' Pension Plan, Toronto-Dominon (TD) Bank, Providence Equity Partners, Madison Dearborn Partners and Merrill Lynch are all in on the deal and working with Citigroup, Deutsche Bank and the Royal Bank of Scotland for financing the deal. With the price now almost $10 per share (at $32.94 today) lower than the original offer price for the company, the general market consensus seems to be that the deal will be reevaluated lower rather than collapse entirely. No matter what, with numbers this big, it's a deal to watch.
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