Dirkyp

BCE Inc.'s LBO Banks: Where's the Common Sense?

OMERs was not contractually bound to complete the Teranet deal - they could have changed the offer to whatever they wanted.

Teachers on the otherhand cannot legally amend its offer - the only way they can do so is to pay the $1B + break fee - realistically if they did that (which perhaps they should) the banks would scatter and the deal would be off. Plain and simple. All that would happen is that Teachers would be out $1B which would not be politically palitable for the folks at Teachers (try explaining to your board and your school teachers that you just wasted $1B).

The deal is unconditional. The banks are on the hook and the only way out is to beg the government to legislate them out of it (the Brits for RBS and Federal gov't for Citi).

A much more plausible and realistic scenario is for everyone to share the break fee - perhaps just the banks to get themselves off the hook. If they have $16 Billion in loans and have mark to market accounting they could easily have an instant loss of over $1B (the break fee) so why not just front the break fee to Teachers and everyone walk away? Much easier for Citi to right off a few hundred million these days along with the other Billions.

Very simple - deal goes through as is or someone pays $1 Billion.

Keep in mind that BCE is still public so if they get wind that the deal is in trouble they are obliged to disclose it right away or they'll get sued.

Hubris of biblical proportion trying to pull this one off.

Personally I think Bell is a train wreck of a company and Telus and Rogers will eat their lunch, especially with BCE's soon to be crippling debt load - not to mention when that debt has to be refinanced it will probably be at much higher rates.

For shame.