BCE Inc.: Bondholders Versus Shareholders Supreme Court Showdown‪?‬

In May 2008, the board of directors of BCE. Inc. (BCE), one of Canada’s leading integrated communications companies, was dealing with the fallout of a previous day’s Quebec Court of Appeal decision. The court had ruled to disallow a $50 billion privatization deal as, according to the court, the process was flawed and did not take into consideration the debenture (bond) holders of Bell Canada (a wholly-owned subsidiary of BCE). The court had ruled that the board allowed a deal in which benefits had accrued only to the shareholders (a 40 per cent increase in value since the firm was "in play") at the expense of the bondholders, who were dealt an 18 per cent decrease in value over the same time period. In deciding whether or not to launch a last-ditch appeal to the Supreme Court of Canada, management and the board needed to determine who were the key stakeholders involved in the decision to take the firm private, what their interests were, and how those interests should guide the board.