PHILADELPHIA -- The $34.8 billion buyout of BCE has become more questionable as the banks funding the deal sought to renegotiate the financing terms, a source familiar with the situation said on Monday.
The banks behind the buyout of BCE, Canada's largest telecommunications company and operator of Bell Canada, submitted new financing terms to the buyout group on Friday, the source said.
The new set of terms contained higher interest rates and other "onerous" conditions, the source said. Additional details were not immediately available.
BCE shares were down $1.95, or 5 percent, at $36.86 in afternoon New York Stock Exchange trade.
The New York Times said the new terms submitted by the banks included higher interest rates, tighter loan restrictions and protections that far exceeded the original terms. Negotiations between the buyout group and the banks lasted all weekend, according to the report.
The newspaper quoted one executive who read the revised terms as saying: "It's patently obvious that the banks have no intention of closing the deal."
BCE said on Monday that it expected the deal to close by the end of the second quarter.
"We have been working on all aspects of the transaction, based on the terms set out in the agreement," said company spokesman Bill Fox.
The buyout group for BCE includes the Ontario Teachers Pension Plan; private equity firms Madison Dearborn Partners, Merrill Lynch Global Private Equity and Providence Equity Partners; and Toronto-Dominion Bank.
"We can't comment on discussions with the banks or the company, but we expect everyone will honor their commitments and we look forward to closing the transaction," the buyout group said.
The lead lenders include Citigroup, Deutsche Bank and Royal Bank of Scotland.
Citigroup and RBS declined to comment on the newspaper report, while Deutsche Bank was not immediately available.
Many lenders have sought to back away from financing commitments since credit markets tightened last summer as banks were stuck holding tens of billions of dollars of loans they could not sell.
Investors have long worried that the BCE takeover might be repriced, delayed or abandoned. Canada's industry minister endorsed the buyout last month.
The efforts to revise the deal echo the recent battle and lawsuits surrounding the buyout of radio operator Clear Channel Communications.
Clear Channel agreed last week to lower its takeover price to $17.9 billion from roughly $20 billion as part of a legal settlement between its buyers and several bank lenders.
© 2014 Newsmax. All rights reserved.