Wednesday, January 9th, 2008
MONTREAL - Canada's telecommunications regulator should review all alternatives to the proposed sale and privatization of BCE Inc. (TSX:BCE), the head of failed BCE bidder Catalyst Asset Management said Wednesday.
"This deal as presently constituted defies many of what the Telecommunications Act's policy objectives are," Brent Fullard said in an interview as it engages in a battle with BCE to present his case directly to the CRTC.
"Because it is a suboptimal outcome for the CRTC, it's incumbent on them to ask, were there other possible outcomes that were available contemporaneously to the company that were in fulfilment of not only the company's goals but in greater fulfilment of its policy objectives."
Fullard sent a letter to the federal regulator, dated Jan. 8, arguing the proposed sale to a consortium led by the Ontario Teachers Pension Plan is not in the interests of Canadians because it fails to achieve the legislated objectives of the Bell Canada Act and Telecommunications Act.
The way in which BCE conducted itself was designed to frustrate other viable transactions what would have better met the policy objectives of the two acts, he wrote.
It would also cost the federal government nearly $800 million in annual taxes.
On Jan. 4, BCE filed its objection to Catalyst's intervention at Feb. 25 hearings scheduled by the Canadian Radio-television and Telecommunications Commission.
BCE argued among other things that the grounds for Catalyst's intervention are beyond the scope of the inquiry, its allegations are best dealt with by the courts and securities regulators, and the regulator should not second-guess the appropriateness of the winner of a bidding process.
It also accused Catalyst of pursuing its intervention for "collateral purpose."
"The nature of a recapitalization proposal that was rejected by a validly constituted board of directors is entirely irrelevant to both the current proceeding and the Commission's statutory mandate...," wrote David Elder, vice-president regulatory law.
Catalyst's 11-page letter to the CRTC addresses each of BCE's objections.
Although BCE accused Catalyst of potential gain, Fullard said senior management, directors and others will earn hundreds of millions of dollars from the deal.
He charges that BCE failed in their securities obligations to disclose the Catalyst offer to shareholders.
BCE's objections are "self-serving and further evidence of their attempts to obfuscate the existence or a superior transaction," he said.
BCE shareholders have endorsed the all cash $42.75 per share offer by Ontario Teachers and its partners.
The deal, which is now slated to close in the second quarter of 2008, somewhat later than originally expected because of the hearing, is subject to approval by the CRTC and resolution of a lawsuit filed by two disgruntled sets of bondholders.
Wednesday, January 9, 2008
Posted by Fillibluster at 5:50 PM