Bce Cast Study
BCEInc-Bondholder Case
1. List the key stakeholders and their interests in the proposed privatization of BCE. Who would be the winners and losers if the proposed privatization of BCE were to proceed?
* Board of Directors of BCE- Interested in maximizing shareholder value and would be considered a winner if privatized. * Bondholders- Interested in maintaining investment grade bonds of BCE and would be considered losers if BCE is privatized since their bonds would most likely become junk bonds. * Shareholders- Interested in maximizing share value and would benefit if BCE becomes privatized. * Competitors- Interested in maximizing their market share and win or loss cannot be determined as the effects the privatization of BCE on their companies cannot be determined. Although privatization may reduce the value of BCE but may increase liquidity for BCE. * Consumers- Interested in maintaining services with BCE. Privatization may result in an improvement in quality since the new owner(s) would attempt to improve the company after takeover. * Employees- Interested in maintaining their jobs. Winning or losing is unknown as intentions of the new owner(s) are unknown. * Strategic Oversight Committee- Interested in maximizing shareholder value and would be considered a winner if privatized.
2. Examine and comment on the reaction of the stock and bond markets to the various key events in the litigation time line.
In the early part of 2007 BCEs stock had been trading around $30 per share and the value of the bonds were around $122. In April 2007, Ontario Teachers’ Pension Plan(Teachers’) filed a Statement of Beneficial Ownership (Schedule 13D) notifying the Securities and Exchange Commission of their intentions to attempt a leveraged buy out of BCE. Once it was made public that BCE was a LBO target the stock and bond markets reacted drastically and inversely of each other. The stock price soared to $39 per share, a 21% increase in value.
1. List the key stakeholders and their interests in the proposed privatization of BCE. Who would be the winners and losers if the proposed privatization of BCE were to proceed?
* Board of Directors of BCE- Interested in maximizing shareholder value and would be considered a winner if privatized. * Bondholders- Interested in maintaining investment grade bonds of BCE and would be considered losers if BCE is privatized since their bonds would most likely become junk bonds. * Shareholders- Interested in maximizing share value and would benefit if BCE becomes privatized. * Competitors- Interested in maximizing their market share and win or loss cannot be determined as the effects the privatization of BCE on their companies cannot be determined. Although privatization may reduce the value of BCE but may increase liquidity for BCE. * Consumers- Interested in maintaining services with BCE. Privatization may result in an improvement in quality since the new owner(s) would attempt to improve the company after takeover. * Employees- Interested in maintaining their jobs. Winning or losing is unknown as intentions of the new owner(s) are unknown. * Strategic Oversight Committee- Interested in maximizing shareholder value and would be considered a winner if privatized.
2. Examine and comment on the reaction of the stock and bond markets to the various key events in the litigation time line.
In the early part of 2007 BCEs stock had been trading around $30 per share and the value of the bonds were around $122. In April 2007, Ontario Teachers’ Pension Plan(Teachers’) filed a Statement of Beneficial Ownership (Schedule 13D) notifying the Securities and Exchange Commission of their intentions to attempt a leveraged buy out of BCE. Once it was made public that BCE was a LBO target the stock and bond markets reacted drastically and inversely of each other. The stock price soared to $39 per share, a 21% increase in value.