Thebanks that agreed to finance the $34bn takeover of Canadiantelecommunications group BCE are again pushing for changes to the termsof the deal.
The moves come after a legal ruling on Friday thatcould have eliminated their obligations but instead tossed the ballback into their court.
BCE, its private equity buyers and thebanks had been in "pretty intense talks" over terms of the banks'financing for months, said one person close to the situation, whoqualified the concessions the banks were seeking as "significant".
Inlate May, a Canadian court of appeals ruled that BCE had not properlyconsidered its bondholders' interests when it agreed last year to bebought by the Ontario Teachers' Pension Plan, Providence EquityPartners, Madison Dearborn Partners and Merrill Lynch Global PrivateEquity.
Last week, Canada's Supreme Court overturned thatdecision - which could have relieved the bank lenders of theircommitments to finance the deal - and said the deal could proceed.
Nowthat bondholders' arguments against the take-over have been quashed,the banks are pushing for a range of concessions that could make theirfinancing commitments more palatable in a difficult market. Those couldinvolve the rate at which the banks agree to lend, the amount of equitythe buyers would invest, or lending covenants to which BCE could besubjected.
Three of the four banks that have agreed to fund thebuy-out - Citigroup, Deutsche Bank and Royal Bank of Scotland - took apublic beating when broadcaster Clear Channel sued them as its own dealthreatened to fall apart. The Clear Channel deal was laterrenegotiated, at a lower price and with higher interest rates.
Toronto-DominionBank, the deal's fourth lender and one of the largest banks in Canada,finds itself in a complicated position because it has also committed toprovide equity for the deal.
After last week's court ruling, thebanks said in a statement that they continued to negotiate the deal'sfinancing documents "in good faith" with BCE's buyers, and said theystood behind their "original commitment" to the deal.
BCE, whichyesterday won the last regulatory approval it needed to move ahead withthe deal, has now delayed the buy-out's scheduled consummation untilthe end of the third quarter.