Financial Challenges
Chapter 5
New Offering of BCE Debt and Preferred Share Issues
In the autumn of 2002, BCE Inc., Canada’s largest telecommunications firm, raised $2 billion in three debt issues:
- $300 million principal amount of 6.20% series A notes due in 2006
- $1.05 billion principal amount of 6.75% series B notes due in 2007
- $650 million principal amount of 7.35% series C notes due in 2009
These debt issues were offered to buyers around the world by a syndicate headed by TD Securities that included Merrill Lynch of the United States and Le Groupe Société Générale in Europe. BCE sold three issues with different interest rates and maturity dates to appeal to the various desires of the potential bond buyers. BCE relied on the advice of investment dealers in designing the appropriate package to obtain the funds it needed. The total package included preferred shares (also discussed in this chapter) and common shares (discussed in the next chapter). As part of the package, BCE sold 6 million cumulative redeemable first preferred shares, series AC, at a price of $25.50, through the same investment dealer/ investment banker syndicate.
The net proceeds of the sale of these issues were used to pay part of the acquisition costs of buying back the minority interest in Bell Canada from SBC Communications. BCE now owns all of Bell Canada again.
Large companies like BCE are among the most frequent issuers of debt securities. Debt securities (e.g., bonds, debentures, and notes) issued by firms such as BCE are rated with respect to their riskiness by various debt rating agencies (i.e., private companies) such as the Dominion Bond Rating Service. Many investors use ratings information in their decisions to buy or sell a company’s debt securities. The role that debt ratings agencies play in fixed-income financing is one of the topics examined in this chapter.
Back to Financial Challenges
|
