Clear Channel, Part Deux: This Time It's Bell Canada

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The latest deal to come under pressure from the credit crunch is the acquisition of the giant Canadian telecom company Bell Canada by a consortium led by the Ontario Teachers' Pension Plan. The deal that was billed as "the biggest leveraged buyout of all time" now faces pressure from the banks that have committed financing to the deal, according to reports. One executive involved in the negotiations has told The New York Times that the Bell Canada is "Clear Channel, the sequel," referring to the leveraged buyout that was almost scuttled when banks threatened to walk away from financing commitments until the sellers agreed to a lower price.
The group led by the Ontario Teachers' Pension Plan beat out private equity firms Kohlberg Kravis Roberts and Cerberus Capital in the auction for Bell Canada back when the going private mania was in full swing. That winning group includes Toronto-Dominion Bank, Providence Equity Partners, Madison Dearborn Partners and Merrill Lynch Global Private Equity.
Citigroup, Deutsche Bank and Royal Bank of Scotland all committed financing to the deal. But last week they began to balk, demanding tough debt covenants and higher interest rates. Sources say the terms look like they were designed to force a renegotiation of the deal.
Bell Canada and the Ontario Teachers' Pension Fund are holding firm for now, saying that they intend to hold the banks to their original lending terms.Shares of Bell Canada have dropped on the bet that, at best, shareholders will be forced to take a lower price. The deal was expected to close in June.

Shares of Bell Canada Drop as a Buyout Deal Unravels
[New York Times]

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