OTTAWA and GATINEAU, March 27 /CNW Telbec/ - The Canadian
Radio-television and Telecommunications Commission (CRTC) today approved,
subject to certain conditions, the purchase of BCE Inc.'s (BCE) broadcasting
assets by a group that includes the Ontario Teachers' Pension Plan (Teachers')
and three American private-equity firms, Providence Equity Partners L.P.,
Madison Dearborn Capital Partners L.P. and Merrill Lynch Global Partners Inc.
"The application under review proposed to privatize the country's largest
communications company and included significant foreign interest," said Konrad
von Finckenstein, Q.C., Chairman of the CRTC. "Consistent with previous
decisions, we have imposed conditions to address our concerns relating to
corporate governance. These conditions will ensure that control of BCE remains
in Canadian hands once the transaction is completed."
The transaction will receive the Commission's approval if the conditions
are met. In particular, the Commission is requiring the group of investors to
ensure the following changes in the governance structure are made:
- the number of directors on the Board of Directors must be fixed at 13;
- Canadian investors must at all times nominate six directors on the
Board, one more than non-Canadian investors, who may designate five;
- the Chairman of the Board must be Canadian and cannot be the Chief
Executive Officer or a director nominated by a non-Canadian investor;
- a second Teachers' representative must sit on the Executive Committee
of the Board;
- the Independent Programming Committee must consist of Canadians who are
not affiliated with non-Canadian investors; and
- the threshold for veto rights must be raised to $110 million,
approximately 5 per cent of the value of the broadcasting assets.
In addition, the Commission clarified that for purposes of determining
effective control, it will only consider directors to be Canadian who are both
Canadian by citizenship or residency and who are designated by Canadian
The proposed arrangement between Teachers' and one of its former
executives, P. Morgan McCague, was another area of concern for the Commission.
Under the proposal, Mr. McCague will hold 66.7 per cent of the class A voting
shares and exercise his voting privileges according to Teachers' directions,
thereby allowing Teachers' to exercise control over the majority of the
company's voting shares.
The CRTC accepted this arrangement only after being provided with a letter
from the Financial Services Commission of Ontario stating that this structure
does not contravene the province's prohibition against pension funds directly
or indirectly investing in more than 30 per cent of the voting shares of a
In accordance with its tangible benefits policy, the Commission revised
the value of BCE's applicable broadcasting assets from $109.6 million to
$219.1 million, which increases the tangible benefits package to $21.9
million. As part of this package, the Commission has directed that $10.5
million be placed in a fund whose annual revenues will support new media
The broadcasting assets involved in this transaction include Bell
ExpressVu, cable assets in the province of Quebec and a minority stake in
Today's decision follows a public process that included a public hearing,
which began on February 25, 2008.
The CRTC is an independent, public authority that regulates and supervises
broadcasting and telecommunications in Canada.
Broadcasting Decision CRTC 2008-69
Broadcasting Notice of Public Hearing CRTC 2007-19
Backgrounder on the BCE transaction
BCE Inc. proposed share structure
Board of BCE Holdco proposed by applicant
Board of BCE Holdco as required by the CRTC
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