Bell Canada Debenture Holders Unveil Litigation Strategy



    TORONTO, Sept. 19 /CNW/ - The Committees comprising institutional holders
of Bell Canada debentures announced today that they intend to contest Court
approval of the "going private" Plan of Arrangement scheduled to be voted upon
by BCE shareholders on Friday September 21, 2007.
    The Committees' view is that the proposed LBO will result in significant
losses to the debenture holders and is unfair, prejudicial and contrary to the
trust indentures dated July 1, 1976 and April 17, 1996.
    In connection with the LBO, Bell Canada is being called upon to provide
guarantees and security for the acquisition debt. The Committees are of the
view that there is no benefit accruing to Bell Canada in guaranteeing and
securing such debt. The new financing will not be used for any Bell Canada
corporate purpose or otherwise benefit Bell Canada's debenture holders.
    The Committees hope that their concerns will be satisfactorily addressed,
but are prepared to proceed in Court to fully protect their interests and the
interests of their clients.
    The Committees will ask the Court to rule that the Plan of Arrangement is
not fair or reasonable to the debenture holders and that the LBO transaction
is a "reorganization or reconstruction" within the meaning of certain of the
trust indentures. Any reorganization under the 1976 and 1996 trust indentures
requires the trustee for the debenture holders to approve the transaction as
being in no way prejudicial to the debenture holders. Bell Canada debentures
have already lost hundreds of millions of dollars in aggregate market value
since the spectre of a potential privatization became public.
    The additional debt for the LBO and the related interest costs have
already caused one rating agency to downgrade the Bell Canada debentures from
investment grade to junk status. Other rating agencies have indicated that
they may follow suit when further details of the transaction are known.
    Bell Canada's actions are contrary to statements that it has made in the
past. For example, as recently as December 2006, the company's CFO said:

    "I've been consistent in saying that our business characteristics warrant
    us maintaining solid, investment grade credit ratings, and we've been
    very careful to ensure that that's the case over the past years."

    
    The anticipated litigation will include:

    -   seeking a declaration that the transactions contemplated in the Plan
        of Arrangement submitted by BCE amount to a "reorganization or
        reconstruction" under the terms of the 1976 and 1996 Trust Indentures
        that requires trustee approval on behalf of debenture holders;

    -   seeking a vote upon the Plan of Arrangement for debenture holders as
        affected stakeholders; and

    -   contesting Court approval of the Plan of Arrangement in that the
        transactions are neither fair nor reasonable from the point of view
        of the debenture holders.
    

    Other remedies, including against other parties, are under active
consideration but have not been disclosed at this time.
    The Committees are comprised of a "blue chip" roster of life insurance
companies and money managers in the North American marketplace and include:
Addenda Capital Inc., AEGON/Transamerica Life Canada, CIBC Global Asset
Management Inc., Connor Clark and Lunn Investment Management Ltd., Manitoba
Civil Service Superannuation Board, Manulife Financial Corporation, Philips,
Hager & North Investment Management Ltd. and Sun Life Assurance Company of
Canada.
    The Committee members believe that they are fulfilling the highest
fiduciary standards by acting to protect the interests of their valued clients
and customers.





For further information:

For further information: Robert Thornton, Tel: (416) 304-0560, Email:
rthornton@tgf.ca, Counsel for the informal committee of debenture holders
under the 1976 and 1996 indentures; Markus Koehnen, Tel: (416) 865-7218,
Email: markus.koehnen@mcnibm.com, Counsel for the informal committee of
debenture holders under the 1997 indentures

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