Bell Canada's $50 billion acquisition in doubt

Bell Canada Enterprises (BCE) Inc. of Montreal may not meet one of the conditions of its acquisition, originally scheduled to close Dec. 11.

On Wednesday the company announced its auditor, KPMG, gave the telecom giant a "preliminary view" that it "does not expect to be in a position to deliver ... Dec. 11 .. an opinion that BCE would meet the solvency tests" required as a condition of the deal.

Bell Canada is the incumbent telecom carrier in the provinces of Quebec and Ontario, which together comprise more than half the population of Canada.

The companies planning to buy BCE -- Ontario Teachers' Pension Plan, Providence Equity Partners Inc., Madison Dearborn Partners, LLC and Merrill Lynch Global Private Equity -- will need to spend about C$50 billion (US$40.5 billion) to purchase all outstanding shares of firm, in a deal initially announced in June, 2007.

Four banks -- Toronto-Dominion, Deutsche Bank, Citigroup and Royal Bank of Scotland -- agreed last June to provide US$30 billion in loans so the consortium could purchase each BCE share for $42.75.

As of Wednesday morning, none of the banks or potential buyers have announced plans to back out of the agreement.