On June 20, 2008, the Supreme Court of Canada released its decision, with reasons to follow, regarding BCE's proposed plan of arrangement. This decision has been eagerly anticipated due to its impact on the Canadian capital markets, particularly on the fiduciary duty of directors in the context of change of control transactions.
In its unanimous decision, the Supreme Court approved the largest leveraged buyout in Canadian history whereby an investor consortium led by Teachers' Private Capital, Providence Equity Partners Inc. and Madison Dearborn Partners Inc. would acquire, by way of a plan of arrangement under the Canada Business Corporations Act (the Plan), all the outstanding common shares of BCE. In doing so, the Supreme Court overturned the decision issued by the Québec Court of Appeal on May 21, 2008 and affirmed the trial judge's approval of the Plan.
In the May 2008 issue of The Material Change Report, we examined the facts surrounding this case and the Québec Court of Appeal's unanimous decision to overturn the trial decision and deny approval of the Plan. Among other things, the Québec Court of Appeal found that the board of directors of BCE overlooked the interests of holders of certain debentures issued by Bell Canada Inc., a wholly-owned subsidiary of BCE, as it did not take into account the adverse financial impact of the BCE leveraged buyout on these holders.
We will be publishing a further Material Change Report following the release of the reasons supporting this decision of the Supreme Court.
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