Wednesday, November 26, 2008

BCE Shambles

BCE (BCE) experienced a body blow today. The much anticipated deal is to close on Dec 11, 2008. Given the Citigroup was propped up everyone expected it to go forward. Now KPMG who was to provide a solvency opinion as a pre-condition, is saying they do not believe the firm will be solvent. Ontario Teachers pension plan acknowledges that this is a pre-condition.

Who is the culprit. KPMG is looking suspicious. While the economic scenario is changing the shades of doom and gloom have not been recently material. So to conclude that market conditions have changed is just too cute. KPMG is probably hiding behind a legal wall just so they can say “We told you so”.

Lawyers need to examine the timeline on this opinion. The amount of debt has been well known for months. So to come out at this late date and say that it is the problem is inadequate. But if someone comes up with a small technical change can KPMG now go back and say it’s all good. Then again the lenders are supposed to be savvy financial types maybe they will elect to ignore KPMG and stop relying on third party cover.