BCE calls quick hearing on bondholder appeal vital

OTTAWA (Reuters) - Hundreds of thousands of BCE Inc. (BCE.TO)(BCE.N) shareholders could lose billions of dollars unless the Supreme Court of Canada hears a quick appeal of a lower court decision that threatens to scuttle the buyout of the company, BCE argued in a court submission.

In a filing late on Thursday, BCE urged the Supreme Court to rule by June 30 on an appeal of a decision made by the Quebec Court of Appeals this week that put the C$34.8-billion ($35.2 billion) buyout deal in jeopardy.

"This is a matter of extreme urgency in which the fate of the largest transaction of its kind in Canadian history hangs in the balance," BCE told the court.

Otherwise, it said, "the transaction will be jeopardized, or perhaps destroyed, simply as a result of the passage of time associated with resolving this litigation, and BCE and its hundreds of thousands of shareholders may well suffer catastrophic losses in the billions of dollars."

Wednesday's unexpected Quebec court decision sided with bondholders who said the leveraged buyout of BCE by a group of investors led by Ontario Teachers' Pension Plan was unfair to them.

The Quebec court ruling said that company directors have a duty not simply to maximize shareholder value but also to look after the interests of bondholders and other stakeholders, possibly extending beyond the bondholders' contractual legal rights.

BCE said an appeal was important not just for its own shareholders but because of its implications for corporate governance in general.

"If left to stand uncorrected, this decision places directors of public companies in an impossible position making it extremely difficult for them to understand, let alone perform, their duties to the corporation and its various stakeholders when faced with a change-of-control transaction," it argued.

"This expansive approach, which has never been previously applied by any court in Canada, will destroy the bedrock principle of commercial certainty and will have a profoundly negative impact on the investing public."

BCE pointed out to the Supreme Court that the outside date of the proposed buyout was June 30, making a quick decision important.

It noted that in the immediate aftermath of the Quebec decision, BCE shares have already fallen by about C$5, representing a decline of about C$4 billion.

"In view of the significant deterioration in the credit markets that has occurred since the transaction was entered into almost one year ago, the transaction could not now be replicated and the loss suffered hundreds of thousands of shareholders of BCE would be irreversible," it said.

BCE pointed to five cases in which the Supreme Court had shortened normal time periods because of the urgency of the issues involved.

($1=$0.99 Canadian)

(Editing by Peter Galloway)