BCE and Bondholder Rights

Even with the TSX hitting all time highs and Air Canada announcing 2000 layoffs later in the year, focus today is on Bell Canada and the takeover by Ontario Teachers Pension Plan and a group of private equity firms in the US.

At the heart of the matter is whether bondholders have any rights in stopping the takeover. Bondholders are upset as the takeover group is going to load the company up with debt and the existing bondholders will have less assets available to protect them in the event that BCE defaults.

The value of BCE bonds dropped about 15% – 20% after the initial deal was announced. What are your thoughts on how the courts will rule and whether bondholders have a right to seek compensation?

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