CRTC eyes proposed BCE takeover
EmptyTORONTO -- Canada's broadcast regulator on Monday urged a giant Ontario pension fund to do more to ensure that domestic phone and broadcast giant BCE Inc. does not fall under a U.S. company's control following a proposed CAN$38.4 billion ($37.8 billion) takeover.
"I want to make sure the control is with Canadians, and I'm not convinced of that the way you constructed it," Konrad von Finckenstein, chairman of Canadian Radio-television and Telecommunications Commission, told executives of the Ontario Teachers Pension Plan as hearings into the takeover got under way.
The Ontario pension fund, already the largest shareholder in BCE, aims to take it private in partnership with U.S. private equity firms Providence Equity Partners and Madison Dearborn Partners and Wall Street investment bank Merrill Lynch.
In addition to its phone service, BCE owns and operates domestic satellite TV service Bell ExpressVu LLP, has cable assets in Quebec and a minority stake in the CTV national TV network, the country's primetime ratings leader.
Teachers' CEO Jim Leech told the CRTC that the Canadian pension fund will hold 51.6% of shares in the phone giant, while its American equity partners will retain minority stakes.
Canadian law bars foreign investors from owning a majority stake in domestic phone companies, broadcasters and other indigenous content carriers.
"A clear majority of the equity in a privately owned BCE will be held by Canadians, with day-to-day management and operation residing with management of the various companies," Leech said.
But von Finckenstein, who recently gave Canadian broadcaster CanWest Global Communications a rough ride before it received permission to acquire rival Alliance Atlantis Communications with U.S. equity partner Goldman Sachs & Co., took issue with the proposed composition of the BCE board post-acquisition.
To comply with Canada's foreign ownership restrictions, Teachers said it will to appoint five directors for the BCE's boardroom, with Providence Equity Partners to name another three and Madison and Merrill Lynch to appoint one each.
The CRTC's von Finckenstein said that a majority of BCE board members will have to be Canadian, otherwise the phone giant will offer only "paper compliance."
The CRTC hearings into the BCE takeover are expected to conclude Tuesday.