RE: BCE deal good for our economy...newsOne might be tempted to point the finger at KPMG, but thatanger would be misplaced. I would submit that it can likely be arguedthat if one applies the balance sheet test (assets-liabilities =shareholder equity) to the proposed capital structure for the BCE deal,that the company has never been solvent on a mark-to-market basis,other than the day the deal was signed perhaps. And herein lies theproblem.
Effectively, when you deconstruct the language of thenow-infamous solvency clause in the BCE deal, what it says is: “If athird-party accountant concludes that the purchasers paid too much forBCE’s assets when they are benchmarked against current market prices atthe time of closing, then the company is insolvent and the dealcollapses.”
That is the best thing I have read on this issue. The author is absoilutely correct. That clause was there the whole time, to be used whenever they wanted. It's absurd to test for solvency this way. If Teachers and the banks wanted to do the deal, magically the solvency figures would be massaged to pass the test. If not, then this deal the ENTIRE time - from start to finish- never had a chance of being done.
BCE's busniess is the smae - or better - than it was when Teachers agreed to buy them. The only thing that changed is the market. That they can renege on this deal this way is absolutely shameful.
BCE shareholders are rightfully angry at BCE, but it is TEACHERS who deserves the anger and blame. BTW, Teachers could waive that clause if they wanted to.
What a sham. Two years of ups and downs to end this way? This stinks to high heaven. And I'm surprised that BCE is going to accept this without a major fight.