Lenders underwriting the C$52 billion ($52.4 billion; €33.4 billion) BCE buyout reportedly want to renegotiate the deal’s financing with higher interest rates, tighter loan restrictions and stronger protections for the banks.
Unnamed sources told the New York Times that the banks backing the deal, led by Citigroup, Deutsche Bank and the Royal Bank of Scotland, have sent revised terms to the sponsor group, which includes Teachers’ Private Capital, Providence Equity Partners, Madison Dearborn Partners, Merrill Lynch Global Private Equity and Toronto-Dominion Bank.
Though the deal had satisfied most regulatory requirements, related bondholder lawsuits were dismissed and the deal was expected to close in June, an executive who read the revised term sheet told the newspaper: “It’s patently obvious that the banks have no intention of closing the deal.”
A Deutsche Bank spokesman declined to comment and all other parties involved could not be reached for comment.
The buyers reportedly held several conference calls over the weekend to discuss options including filing a lawsuit to force financing of the deal on its original terms – an action that was recently taken by Thomas H Lee Capital and Bain Capital in attempt to close their Clear Channel buyout. That deal’s sponsors and lenders, again including Citigroup, RBS and Deutsche Bank, eventually settled a bitter, publicly aired dispute by agreeing to reduce the deal’s size by some $1.4 billion.
On Monday, BCE’s stock fell more than $2 per share on the New York Stock Exchange.
Numerous buyouts have been revised or fallen through since the credit crisis began last summer including a JC Flowers-led buyout of student loan company Sallie Mae and Cerberus Capital Management’s deal for equipment rental company United Rentals.