The Canadian Supreme Court has overturned a lower court decision that would have derailed the C$52 billion leveraged buyout of Bell Canada. No explanation was given, although the Court’s website said “reasons to follow.”
This ruling does not come as much of a surprise, as it basically affirms that bondholders don’t have the same standing as shareholders when it comes to a major corporate decision like accepting an LBO. If they want such rights, then they had better explicitly negotiate them in the first place. Otherwise, directors have only one master to serve.
Now comes the part where I sound like a broken record: This ruling is not the end of anything. In fact, it’s mostly been an unexpected diversion.
The real battle over BCE will be between the buyers and lenders over financing terms. It’s no coincidence that a bank document surfaced during the Clear Channel litigation that joked about just putting a BCE logo on the CCU materials for the next go-around. And then there could be issues with BCE shareholders — yeah, the ones with actual voting rights — since the buyer/lender negotiations are bound to produce a lower sale price.