Chief Justice To Head BCE Appeal Panel

OTTAWA, June 2 (Reuters) – The chief justice of the Supreme Court of Canada and two other judges will decide this week on whether to hear an appeal of a lower court decision that could derail the C$34.8 billion ($34.8 billion) plan to take BCE Inc.(BCE.TO: Quote, Profile, Research)(BCE.N: Quote, Profile, Research) private.

The high court named Chief Justice Beverley McLachlin and justices Louis LeBel and Louise Charron as the panel which will make the decision on the telecom giant's request to hear its argument on why the Quebec Court of Appeals ruling was wrong.

The Quebec court had ruled that the deal, the world's largest leveraged buyout, was unfair to bondholders as it would lower the value of their bonds. It said directors must consider bondholders' interests, not just those of shareholders.

The Supreme Court of Canada has not said when its three-judge panel would decide, but it will have to be in the next few days if it wants to keep to its suggested timetable leading up to a possible June 17 oral hearing.

The first step in that scenario is a June 6 deadline for BCE's written appeal arguments.

At stake is billions of dollars in shareholder value as well as the status of the debt of BCE, the parent firm of Bell Canada. BCE shares traded on Monday morning at C$34.87 a share, down 18 Canadian cents from Friday's close and well below the C$42.75 being offered in the buyout.

One group of bondholders noted in their submission to the Supreme Court late on Friday that two rating agencies had already downgraded Bell's debentures from investment grade to junk status, with an 18 percent fall in market value.

“It is unprecedented for a company to go from an A-level investment grade credit rating to junk status in an LBO (leveraged buyout). It is also the first time in Bell's history that its debt has been ranked below investment grade,” they submitted. 

OTTAWA, June 2 (Reuters) – The chief justice of the Supreme Court of Canada and two other judges will decide this week on whether to hear an appeal of a lower court decision that could derail the C$34.8 billion ($34.8 billion) plan to take BCE Inc.(BCE.TO: Quote, Profile, Research)(BCE.N: Quote, Profile, Research) private.

The high court named Chief Justice Beverley McLachlin and justices Louis LeBel and Louise Charron as the panel which will make the decision on the telecom giant's request to hear its argument on why the Quebec Court of Appeals ruling was wrong.

The Quebec court had ruled that the deal, the world's largest leveraged buyout, was unfair to bondholders as it would lower the value of their bonds. It said directors must consider bondholders' interests, not just those of shareholders.

The Supreme Court of Canada has not said when its three-judge panel would decide, but it will have to be in the next few days if it wants to keep to its suggested timetable leading up to a possible June 17 oral hearing.

The first step in that scenario is a June 6 deadline for BCE's written appeal arguments.

At stake is billions of dollars in shareholder value as well as the status of the debt of BCE, the parent firm of Bell Canada. BCE shares traded on Monday morning at C$34.87 a share, down 18 Canadian cents from Friday's close and well below the C$42.75 being offered in the buyout.

One group of bondholders noted in their submission to the Supreme Court late on Friday that two rating agencies had already downgraded Bell's debentures from investment grade to junk status, with an 18 percent fall in market value.

“It is unprecedented for a company to go from an A-level investment grade credit rating to junk status in an LBO (leveraged buyout). It is also the first time in Bell's history that its debt has been ranked below investment grade,” they submitted. 

By Randall Palmer