GATINEAU – Day two of the hearing into the acquisition of Bell Canada by a consortium of private equity interests wrapped up in about half an hour this morning as CRTC chairman Konrad von Finckenstein decided to reconvene March 11.
After hearing Ontario Teachers Pension Plan president and CEO Jim Leech respond to many of the Commission’s concerns raised yesterday – and that certain answers to some queries would not be forthcoming for a few days – von Finckenstein said (and we’re paraphrasing here) that the two sides needed more time to exchange information, get additional information and digest the information already consumed.
A consortium led by the Teachers’ Private Capital, the private investment arm of the Ontario Teachers’ Pension Plan, along with Providence Equity Partners and Madison Dearborn Partners, bid $51 billion (debt included) in 2007 to take the country’s largest telco private.
In day one of the hearing, which Cartt.ca reported on yesterday, the CRTC panel concentrated on the level of Canadian control of the corporation, as required by the Broadcasting Act (since this hearing is about the company’s media and media distribution assets CTVglobemedia and Bell ExpressVu).
Since the end of yesterday’s session, Teachers and the other partners offered to revise the board and executive committee structures which raised alarm among the commissioners.
The 13-member board as proposed was to be comprised of five Teachers appointees, five from Providence and Madison Dearborn, CEO George Cope and two independent directors chosen collectively by Teachers, Providence and MD. Leech committed to altering that a bit this morning saying that one of the independent directors must be approved by Teachers, regardless of what the others say, and that he or she would be Canadian. Plus, the chairman of the new Bell board must be someone appointed by a Canadian shareholder.
The moves would “enhance the Canadian-ness of the board,” said Leech.
He also said the executive committee, which was to be a team of four: the company CEO, one each appointed by Madison Dearborn, Providence Partners and Teachers, would be expanded by one, who would be chosen by Teachers.
“Thank you very much for that comprehensive reply,” said von Finckenstein when Leech was finished. The Commission will deliberate now to see “if you have moved far enough to satisfy us on the issue of Canadian control.”
Another string also left untied until March was the structure of the deal as it applied to pension regulation. Under Ontario pension law, Teachers (or any other pension plan) can’t own more than 30% of the voting shares of a corporation, so a man named Morgan McCague (a former Teachers’ executive), will own 66.6% of the voting shares – but will vote those shares according to the wishes of the controlling equity holder. Teachers is putting up 51% of the equity in the deal.
Von Finckenstein is concerned that the structure of the deal might not be palatable to pension fund regulators and wants to hear an opinion directly from the Financial Services Commission of Ontario.
– Greg O’Brien
