GATINEAU, Que.–The partners in the proposed $52 billion takeover of Bell Canada parent BCE Inc. were sent back to the drawing board Tuesday after the federal regulator continued to cast doubt about whether the iconic company would remain in Canadian control.
Tuesday's re-hearing of the issue was called after the Ontario Teachers' Pension Plan and its minority U.S. private equity partners failed last month to satisfy the federal regulator that its management structure kept Bell in Canadian hands.
But after only about 20 minutes of hearing the proposal, Canadian Radio-television and Telecommunications Commission chairman Konrad von Finckenstein remained unsatisfied, asking the officials to huddle for 60 minutes and re-argue their case.
"I think this half-way house really doesn't help us," von Finckenstein said. "This is a classic situation of trying to be half-pregnant."
The CRTC chairman told presenters he understood the U.S. partners, led by Providence Equity Partners needed to protect their investment.
But he also said the current proposal left him uneasy.
At issue is whether the 13-member management board of the company clearly keeps control in Canada, or whether the real power will rest with the U.S. partners Providence, Madison Partners and Merrill Lynch.
Although the Teachers' would hold 51.6 per cent of non-voting shares, they would appoint only five directors, the same as the U.S. partners.
Two would be independent – with the Teachers' holding a veto over one of the independent votes – and the last spot will be reserved for Bell's chief executive, who is currently a Canadian.
"This is striking a balance to ensure that Canadians are in control, rather than Teachers are in control," Teachers' CEO Jim Leech explained.
"We believe we have hit that balance appropriately."
Under Canadian law, foreigners cannot control more than 46.7 per cent of a broadcaster of telecommunications company.
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http://www.thestar.com/article/339208
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