Bell Canada Debenture Holders Succeed in Opposing BCE Plan of Arrangement

TORONTO, May 21 /PRNewswire/ -- The Committee comprising certain institutional holders of 1997 Bell Canada debentures learned today that they have succeeded in suspending a proposed plan of arrangement under which BCE would have been acquired by a consortium led by the Ontario Teachers' Pension Plan when the Quebec Court of Appeal issued its judgment rejecting the plan of arrangement.

Committee members objected to the proposed plan of arrangement because they believed it was unfair to debenture holders. The proposed plan would have forced Bell Canada, the BCE subsidiary in which committee members hold bonds, to guarantee $34 billion in loans that the purchaser would have incurred to purchase the shares of BCE. Committee members believed that Bell would receive nothing in return for guaranteeing that debt. The proposed plan had already led to a dramatic decrease in the market value of the bonds and had led some credit agencies to downgrade the bonds' status from investment grade to junk bond status.

Committee members also believed that it would have been unfair for the directors of Bell to have allowed Bell to guarantee the debt without considering the issue from the perspective of Bell and its bondholders.

In rejecting the plan of arrangement, the Court of Appeal found that the BCE board had failed to consider the interests of the debenture holders as they were bound to do under Canadian law. Instead, the BCE board acted on the assumption that they had an overriding duty to shareholders which was wrong in law.

"Our clients are obviously delighted with the result of the decision" said Markus Koehnen and Max Mendelsohn, Partners with McMillan Binch Mendelsohn LLP and counsel to the 97 bondholders. "They are gratified that the Court of Appeal recognized the unfairness that the proposed plan of arrangement would have imposed on the unit holders, pension fund beneficiaries, insurers and others on behalf of whom our clients were contesting the plan of arrangement. Our clients are pleased that they have been able to stand up and protect the interests of those who have entrusted the management of funds into their care."

The Committee was one of two bondholder groups that contested the proposed plan of arrangement. It is comprised of a "blue chip" roster of life insurance companies and money managers in the North American market place such as Addenda Capital Inc., CIBC Global Asset Management Inc., Franklin Templeton Investments Corp., Her Majesty the Queen in Right of Alberta, as Represented by the Minister of Finance, Manulife Financial Corporation, Phillips, Hager & North Investment Management Ltd., Sun Life Assurance Company of Canada, TD Asset Management Inc. and The Wawanesa Life Insurance Company.

Source: McMillan Binch Mendelsohn LLP

CONTACT: Markus Koehnen, McMillan Binch Mendelsohn LLP, Tel: (416)
865-7218, Cell: (416) 846-4961, markus.koehnen@mcmbm.com, Counsel for the
Informal Committee of Debenture Holders under the 1997 Indentures

2008-05-21 20:02:20 0368333 PRNEWSWIRE