I also believe the June 30 deadline is completely artificial. Yes, parties can walk away after that date but everyone has too much committed now: BCE has its reputation on the line, the Teachers Pension Fund and Private Equity firms have spent too much time and money to walk away (not to mention this 100 day plan the Teacher’s have put together indicating they are already envisioning running BCE) and the banks cannot take another reputational hit on the markets or overly antagonize some of the parties (see below). If they miss the June 30 deadline, the parties can enter into a Standstill Agreement (a type of legal agreement freezing everyone’s legal rights to pursue action) and extend the negotiations. Don’t buy June 30th as dooms day.

There is also one factor on one has talked about. The Ontario Teacher’s Pension Plan is one of the largest in the world and very active globally. All banks want their business financing their deals. You don’t think at some point during the negotiations, either the banks or the Pension Plan will swap future favors to get the deal done? It is how the world of business works. The question is whether the BCE financing is used as a bargaining chip negatively or positively for the shareholders. If you use the Clear Channel Communications privatization as a comparison, BCE will go private but shareholders will get less than originally negotiated so don’t bank on a $42.50/share buy-out.

Two final comments:

1. If the negotiations really begin to drag, expect BCE to continue to halt dividend payments. It needs the extra money for flexibility (it could be used to pay down debt and alleviate some concerns of the banks).
2.  Even if you don’t own BCE stock, the decision reinforces that bondholders have relatively little power and raises questions of the utility of purchasing bonds altogether. Tomorrow, I’ll talk about slow-growth dividend stocks as an investment product in lieu of buying bonds.