BCE Decision Due Today

The Canadian Supreme Court has said that it will hand down its BCE buyout ruling today at 4:30pm. My initial reaction was selfish pique about how I can’t start my weekend early. That was soon replaced by intrigue.

There is conventional wisdom that the Canadian Supremes will overturn a lower-court ruling, which found that BCE has the same obligations to its bondholders as it does to its shareholders (yes, I’m oversimplifying it). In fact, traders have basically been baking that assumption into a share price – while leaving lots of cushion for what could still be a bruising battle between the buyout sponsors and lenders. But, if that cookie is baked, why wait to announce the ruling until the trading week is over? And if the answer is so obvious, why didn’t the judges simply issue a ruling immediately following oral arguments Tuesday?

It just makes me a bit uncomfortable. Kind of like when you take a multiple choice test, and each of the first five answers are “C.” Doesn’t make the answers wrong, but does make you begin to doubt yourself…

It’s also worth noting that if BCE bondholders lose today, they may still try to block the buyout via a different legal tact.

The Financial Post writes: “Sources say [bondholders] are set to launch a second court challenge over the structure of the deal which gives [Ontario] Teachers control even though pension rules cap their voting control at 30%. The Canadian Radio-television and Telecommunications Commission left the deal open to the legal challenge when it granted federal approval to the deal in March.”

If such a challenge were to succeed, it could cripple the buyout activities of Canadian pension systems, which would probably lead to an emergency rewrite of national pension law.