BCE ruling gives bondholders new clout in buyouts

Bondholders gained more power in Canada to challenge takeovers and leveraged buyouts after a Quebec appeals court ruled companies can’t ignore their interests to maximize shareholder returns, reported New York-based Bloomberg financial news service May 23.

The Court of Appeal of Quebec, in a 5-0 decision May 21, overturned a trial judge’s approval of a record C$52-billion ($52.8-billion) buyout of BCE Inc. by a group led by the Ontario Teachers’ Pension Plan, saying the bondholders’ interests weren’t taken sufficiently into account when the purchase was approved.

Boards of directors will have to consider the impact of a sale on creditors, rather than simply attempt to sell at the highest price for the benefit of shareholders, which has been the generally accepted practice until now, said Theo Peridis, professor of strategic management at York’s Schulich School of Business. “It is a sweet victory for the bondholders,’’ Peridis said Thursday in a phone interview. "There is no question the bondholders were brushed aside throughout that.’’

Peridis said it was unlikely the Supreme Court would agree to hear an appeal of the decision because the case probably doesn’t meet the test of national importance that the high court judges require. That was true even though the deal would have been the world’s biggest leveraged buyout, he said.

BCE, Peridis said, will likely have to renew talks with banks, shareholders and the bondholders, which include CIBC Global Asset Management Inc., Manulife Financial Corp. and the Province of Alberta. A revised deal will likely include reducing the debt, compensating bondholders and giving less to shareholders.

  • Peridis told the Toronto Star BCE’s board and its legal advisers took a calculated risk when it charged ahead with the deal without taking bondholders into consideration. "I think they were hoping it would go like every other deal; it was a calculated judgment," he said in a May 23 story. "People had all their ducks lined up and were just assuming it wouldn’t happen." Peridis, an expert in mergers and acquisitions, said the appeal court decision appears to rewrite the rules for future deals. "The courts are saying when there is a big transaction, there are many stakeholders and you need to take that into consideration."
  • "Certainly the decision was an unexpected result," said Aaron Dhir, a professor of corporate law at York’s Osgoode Hall Law School, reported the Ottawa Citizen and The Vancouver Sun May 23. In its ruling, the Quebec appeals court relied partly on the 2004 Peoples case in the Supreme Court, where the court said directors had to act in good faith "with a view to the best interests of the corporation" in resolving the competing interests of shareholders and creditors. Dhir said many had interpreted Peoples to mean that directors were allowed to take others’ interests into account. But the BCE decision meant they now were required to do so.

York weather station most sophisticated equipment on Mars probe

A NASA probe descends to Mars with a partly Canadian package of science instruments on Sunday, reported the Ottawa Citizen May 23. The main Canadian contribution to the Mars Phoenix mission is designed by York University with Canadian space hardware company MDA as prime contractor, and it’s a miniature weather station, the first Canadian equipment to reach another planet. It cost about $30 million, which works out to $4 million per kilogram.

NASA sees this as the most sophisticated equipment aboard Mars Phoenix because of its lidar, which is like radar, but uses laser light. It will be the first lidar sent to Mars, and will analyze clouds, dust and mist.

Eco-friendly products – green halo or green wash?

"Green" products are flooding the market at a time when consumers and the government are growing increasingly wary of environmental messages, reported the National Post May 23. Recent polls suggest the plethora of green messaging has become nausea-inducing for consumers. An Ipsos Reid study published last fall said 64 per cent of Canadians "strongly" or "somewhat" agreed that when companies call a product "green", it is usually just a marketing tactic. "As virtually every marketer jumps on the bandwagon with a green claim, marketers must recognize that consumers are about trade-offs," said Alan Middleton, professor of marketing at York’s Schulich School of Business. If marketers told consumers – in a simple and meaningful way – what the trade-off is (for example, that a green product may cost more but clearly reduces waste) consumers might come around, he said. "Marketers have to be more informative about what they have done and why that has validity."

Poet ponders the mystery of time in his new book

Writer and poet Christopher Dewdney‘s new book, Soul of the World: Unlocking the Secrets of Time, is a meditation on time and how it has been characterized in mythology, science, philosophy and the arts, reported the Lindsay Post May 23. Dewdney lives in Toronto, teaches creative writing at York University, and has developed a reputation as a cultural commentator. The author of three books of popular non-fiction, Dewdney is also an accomplished poet, which likely accounts for his lyric, almost poetic, style of writing. Well written and scholarly, without being didactic, Soul of the World is an informative and enjoyable read.

Soul of the World takes a personal approach to the subject of time as Dewdney follows his thoughts and feelings during the course of a one year period. A meditation on the arrival of spring leads seamlessly into a digression on the development of the sundial. The growth of plants leads to a discussion on the development of photography and early cinema. The appearance of kitten pawprints embedded in a brick leads to information about fossils. Dewdney is very good at blending the personal and the scientific.

Film rookies make it to Cannes

Canuck film rookies John Geddes and Jesse Cook had to wade through blood and risk frostbite and pneumonia to make it to the sunny beaches of Cannes, reported the Toronto Star May 23. The Collingwood pals, both 26, are the writers, directors, producers and co-stars of Scarce, a low-budget horror movie about cannibal hillbillies that they’re shopping around the Cannes Film Market, the dealmaker zone running concurrently with the Cannes Film Festival. They filmed Scarce atop Collingwood’s Blue Mountain during the winter of 2006-2007, the area’s coldest winter in 30 years. Freezing their butts really paid off. The Canadian DVD rights to Scarce have been sold to horror specialty firm Anchor Bay Entertainment, and Superchannel has picked up the film for an Oct. 1 TV broadcast.

These hoser horrormeisters don’t have a day of film school or prior filmmaking experience between them. Cook studied history [from 2000 to 2004] at York University and Geddes studied to be a music sound engineer at the Harris Institute for the Arts in Toronto.

City councillor has graffiti on the brain

All hail Sandra "da Vinci" Bussin (BA ’74), armed with her fine arts degree from York University, no less, who has designated herself the arbiter of what is graffiti and what is "art" in her ward, wrote The Toronto Sun May 23. Much to the chagrin of real estate lawyer Darlene Richards-Loghrin, who finally figured out how to stop graffiti vandals from "tagging" (defacing) the wall of her office building on Kingston Road. Tired of having to paint over the wall at her own expense, Richards-Loghrin hired five high-school art students to create a mural, instructing them it had to be "tasteful" and avoid sexual innuendo, hatred or violence. The students complied and, since then, the mural has been left alone by vandals. So, problem solved, right? Wrong. Enter Bussin, who sniffs the new mural doesn’t meet her standards for “great art”.

Drug dealer gets five years for running down man

A drug dealer who ran a man down with his mother’s car in front of an elementary school and then taunted his dying victim was sentenced to five years and three months in prison, reported the Toronto Star May 23. Shawn Edward Plafker, 23, exhibited “grossly deviant behaviour” the evening he took the life of Sumit Weikang Kapoor, 23, in Thornhill on Oct. 27, 2005, Justice Alan Bryant said Thursday in Newmarket court. The judge noted that Plafker was a York University student [he studied at York in 2004 and 2006].

On air

  • Dennis Raphael, a health policy professor in York’s Faculty of Health, discussed body mass index, obesity and what it means to be healthy, during the phone-in segment of CBC Radio’s “Ontario Today” May 22.
  • Joan Gilmour, a professor at York’s Osgoode Hall Law School, commented on a case before the Supreme Court of Canada of a Windsor man who says he suffered psychological injuries that have ruined his business and sex life after he found a dead fly in his jug of drinking water, on CBC Radio’s “World Report” May 22.
  • Gini Dickie, a course director in York’s Urban Diversity Teacher Education Initiative, was interviewed about the Faculty of Education program on Radio Canada International’s Spanish-language “Canadá en las Américas” May 21.