Private equity buyers apparently salvaged a record $52 billion deal for Bell Canada on Friday by postponing its closing date until later this year and canceling dividend payments.
The consortium of banks that had agreed to provide about $34 billion in financing for the acquisition were demanding changes to lending terms made a year ago before the current credit market crunch.
The deal was originally scheduled to close on Monday, but that deadline was extended because of the talks with the banks, as well as a legal issue.
Because the deal is structured under a unique Canadian court process, repricing the agreement to alleviate the lenders’ concerns would have been difficult and time consuming.
The new agreement, however, effectively reduces the purchase price by about $2 a share by moving the closing date to December 11 and halting dividend payments to holders of common shares.