Monday, June 23, 2008

BCE Buyout Back on the Table. Maybe.

Last Friday, Canada's top court over-turned a prior lower Canadian court's ruling that had halted the once record-breaking BCE buyout.  The BCE buyout is now free to move forward without any legal hindrances.  Hindrances of another variety, however, remain.  The lower Canadian court's ruling was a huge surprise, and came as a big relief to the lenders who were balking at terms on the financing packages that they had agreed to during the height of the private equity boom.  Saved by an unexpected legal ruling, the lenders breathed a big sigh of relief and returned to the task at hand:  Figuring out how to get rid of all the other leveraged loans already languishing on their books.  Now that the buyout is back on the table, the tense negotiations have resumed.  The lenders are asking the private equity investors to kick in more equity and accept more onerous terms on the financing.  I do enjoy the mainstream press' constant use of the term "onerous" in reference to the lender's new requests for tighter covenants.  The more likely scenario is that the original terms of the financing package were laughably lax and were cobbled together in about five minutes by bankers looking to cram through another leveraged buyout.  Those bankers have more than likely been laid off for not doing enough due diligence on billions of dollars worth of leveraged loans that are now trading below par and sitting on their former employers balance sheets.  If you are a new reader of Mock The Market and you require further mockery of the BCE saga beyond the scope of this story, please refer to my prior posts on the subject: BCE Buyout on the Rocks and BCE Buyout on the Rocks - Part II.  Rest assured, however, that this is not the last opportunity I will have to mock the BCE debacle.

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