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Canada's biggest buyout collapses Canada's biggest buyout collapses
(2 days later)
The biggest takeover in Canada's history has collapsed on the day it was supposed to have been completed.The biggest takeover in Canada's history has collapsed on the day it was supposed to have been completed.
A group led by Ontario Teachers Pension Plan Board had agreed to buy BCE, owner of Bell Canada, for Canadian $34.8bn ($27.8bn; £18.6bn) in June 2007.A group led by Ontario Teachers Pension Plan Board had agreed to buy BCE, owner of Bell Canada, for Canadian $34.8bn ($27.8bn; £18.6bn) in June 2007.
But the accountants KPMG said last night the company would fail solvency tests because it had too much debt.But the accountants KPMG said last night the company would fail solvency tests because it had too much debt.
It is good news for the banks that had agreed to provide the $35bn (£23bn) of debt to finance the deal.It is good news for the banks that had agreed to provide the $35bn (£23bn) of debt to finance the deal.
One of the conditions for closing the deal was receiving an independent solvency opinion.One of the conditions for closing the deal was receiving an independent solvency opinion.
The buy-out deal was done just before the credit crunch made such agreements all but impossible, because banks that were struggling with their own liquidity problems were reluctant to loan the huge amounts of cash needed.The buy-out deal was done just before the credit crunch made such agreements all but impossible, because banks that were struggling with their own liquidity problems were reluctant to loan the huge amounts of cash needed.
Citigroup was due to provide $11bn of the funding, with Royal Bank of Scotland, Deutsche Bank and Toronto-Dominion Bank funding the rest.Citigroup was due to provide $11bn of the funding, with Royal Bank of Scotland, Deutsche Bank and Toronto-Dominion Bank funding the rest.
No termination fee will be paid by either side.No termination fee will be paid by either side.
BCE has more than 54,000 staff and is Canada's largest communications company.BCE has more than 54,000 staff and is Canada's largest communications company.
As well as telephone and internet business, it owns a satellite communications company, Telesat Canada, and has an interest in CTVglobemedia, Canada's premier media company, which owns the Globe and Mail newspaper. As well as telephone and internet business, it has an interest in CTVglobemedia, Canada's premier media company, which owns the Globe and Mail newspaper.