BCE Banks Play Hardball

Banks financing the BCE deal are now seeking to renegotiate the terms of their agreement, according to The NY Times. Gee, who could have seen that coming?

This could prove a very different situation than what we saw in the case of Clear Channel, although the lenders’ professional vacancy remains intact. First, there is now a bit of precedent thanks to CCU. Second, BCE can’t file suit in Texas (I don’t think), which means that the banks needn’t lose sleep over the possibility of a multi-billion dollar punitive punishment.

Finally, one of the BCE buyers is in a far different situation than was either of CCU’s buyers. That would be Madison Dearborn Capital Partners, which is having a heck of a time raising its $10 billion-targeted new fund. The BCE money is allocated from an existing vehicle, but bailing on the deal might help sway a number of limited partners who have expressed significant reservations about re-upping. MDCP has indicated strong interest in closing BCE, but it may not fight the strong fight if enough LPs propose a quid pro quo.