Thursday, November 27, 2008

Hey BCE Directors: What's the big deal?

Really, do any of you BCE Directors actually know the terms of your big deal?

These Directors of BCE continue to “impress”:

How a tiny clause spelled the end of the biggest deal

Globe and Mail
November 27, 2008

“There was a lot of finger pointing by the BCE board last night. The directors wanted to know where this [insolvency test] clause had come from,” the source said. The awkward answer, the board learned, was that BCE had authored the killer clause."

I am so reminded of this earlier episode of Board amnesia:

Bondholders say BCE finessed takeover deal to avoid bond redemption

The Canadian Press
January 28, 2008

"The court was reminded that three BCE directors - Tom O'Neill, Jim Pattison and Donna Kaufman, the head of the strategic oversight committee - testified they were unaware or couldn't remember seeing all the details of the bids or how they would affect all stakeholders."


Anonymous said...

From the Management Information Circular dated August 14, 2007. Specified earnings and asset coverage were required. Did they read the circular?

Both the 76 Indenture and the 97 Indenture provide that Bell
Canada will not secure any Debt (as defined in those indentures)
without providing concurrently therewith that the debentures
issued under such indentures (and any other Debt subject to a
similar covenant) will be secured equally and ratably with such
Debt. In addition, the 76 Indenture provides that Bell Canada
will not guarantee any Funded Debt (as defined in the
76 Indenture) (subject to certain exceptions) ranking equally
with the Debentures issued under the 76 Indenture unless at the
time of the incurrence of such new guaranteed Funded Debt
(i) all Funded Debt of Bell Canada outstanding at the date of
such proposed guarantee, including the new guaranteed Funded
Debt, does not exceed 66 and 2/3% of “Tangible Property of Bell
Canada” (as defined in the 76 Indenture); and (ii) a specified
earnings coverage ratio is met. Bell Canada will comply with
these restrictions in connection with its guarantees and related
security for the acquisition financing.
In order to ensure compliance with the terms of the
76 Indenture, prior to entering into the Senior Credit Facilities
and Hedging Commitment secured by the Pari Passu Guarantee,
BCE will calculate, as required by the terms of the 76 Indenture,
the “Funded Debt” and “Tangible Property of Bell Canada” in
order to accurately determine the permitted amount of the Pari
Passu Guarantee.

J.A. (Sandy) McIntyre
Senior Vice-President and Chief Investment Officer

Sentry Select Capital Corp.
The Exchange Tower
130 King Street West, Suite 2805
Toronto, ON M5X 1A4
Tel: 416-861-8729 x 237 1-888-246-6656
Fax: 416-364-2398 Cell: 416-995-0148

Anonymous said...

Hey Sandy, That’s cheating. You went to the source document. Don’t you know that a Director’s fiduciary duty in Canada is best comported by ad libbing and shooting from the hip?

Dr Mike said...

It appears that these folks went to the Jim Flaherty school of Economics.

1 + 1 = 3

Good going guys.

And like Flaherty , who was harmed in the making of this movie , only investors as usual.

Another deserving lesson for them , I take it.

Dr Mike Popovich.

richard said...

A great example of how Canada' business elite works.
(1) Take the money
(2) Back slap
(3) Fuck the dog
(4) Screw the shareholders
(5) Use political connections to bail you out of trouble.
(6) Chicken shit media will cover for you.