The non conformer's Canadian Weblog

June 17, 2008



Looking solely after  your own self interest and to Hell with everyone else is not a valid business management approach.. it is the law of the jungle rather and not civilization..
“BCE lawyer defends $52 billion buyout, judges have questions.  OTTAWA — BCE Inc. (TSX:BCE) came under stiff questioning by the Supreme Court of Canada as to whether taking on massive debt as part of its leveraged buyout by a group of funds was in the best long-term interests of the company. The $52-billion takeover of the iconic Canadian company by the Ontario Teachers’ Pension Plan and its U.S. partners is being challenged in court by bondholders who argue their rights were ignored by the BCE board as it worked to maximize the return to shareholders. In opening arguments before the Supreme Court on Tuesday, BCE counsel Guy Du Pont argued that the directors had a duty only to do what is best for the company and its shareholders and their obligation to bondholders was to meet contractual obligations to pay interest and repay principal. “If you look at all the stakeholders and their conflicting interests, it would put the board in an irreconcilable position,” Du Pont said. “There is no duty to consider beyond the contractual rights of the bondholders.” But the argument was tested several times by several of the justices hearing the case. In May, the Quebec Court of Appeal ruled against BCE and the Teachers in finding that bondholder interests also had to be considered by the directors. “How can it be in the interest of the corporation to load it up with debt?” asked Justice Ian Binnie. And Chief Justice Beverley McLachlin questioned whether corporations had a more general duty beyond what is best for the shareholders and the directors up to the time of the deal going through. “


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