BCE has filed suit against the private equity consortium that had agreed to buy the Canadian telecom company over the deal’s C$1.2 billion break-up fee.
The lawsuit, filed in Quebec, said Ontario Teachers’ Pension Plan owes about $704.4 million, Providence Equity Partners owes $386.4 million and Madison Dearborn Partners is responsible for $109 million. Consortium participant Merrill Lynch Global Private Equity is not included in the lawsuit because the firm was not a guarantor of the break-up fee, according to a source familiar with the case.
The private equity consortium cancelled the acquisition of the record-setting C$52 billion buyout on 11 December after auditor KPMG determined the company would emerge insolvent from the buyout.
“Receipt of a solvency opinion from a nationally recognized valuation firm,” was one of the conditions of the original sale agreement, the buyout group said when it cancelled the deal. The sale process was cancelled in accordance with the terms of the agreement and “under these circumstances neither party owes a termination fee to the other”, said the group.
BCE argued that the consortium assumed risks that led to the collapse of the deal, including the deterioration of the global financial markets and the burden of arranged financing, and is still responsible for the break-up fee.