It didn't take long for the latest rescue plan for the Bell Canada (BCE) buyout to be dashed. Early Friday, BCE denied reports that some involved parties in the foundering buyout were considering a scaled-down effort.
"While it is BCE's policy not to comment on rumors or speculation," the company said, "in the interest of its shareholders, BCE is today confirming that no such offer has been made to the company." The buyout, billed as the largest ever, hit a wall last month when auditing firm KPMG reported that it couldn't vouch for the solvency of the deal.
Since then, the Ontario Teachers Pension Plan, some banks, and a group of private equity and hedge funds have been struggling to salvage the deal, even as the job becomes more difficult as the global financial meltdown worsens. A deadline for saving the deal was set earlier for next Thursday. In its statement Friday, BCE said that it "continues to work with KPMG and the purchaser."
Behind the scenes, breakup fees that could total tens of millions of dollars are looming. The fees would be paid if the original deal of about $50 billion goes belly up as now seems likely.
The report that BCE discounted some stakes suggests that some of the players might take a minority stake in BCE rather than go through with the entire deal as originally proposed.
In addition to the Ontario Teachers Pension Plan, which is the lead investor in the proposed buyout, other major participants include Providence Equity Partners, Madison Dearborn Partners, and Merrill Lynch.
BCE has challenged the KPMG audit and notes that it has enough funding to continue to fund its operations.