BCE restructuring trick; making BCE a debt-free public company ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Give away all of BCE's long term debt, and an equivalent amount of BCE shares, to a pension plan.
There is a good business opportunity, that no new liquidity is needed to facilitate the new positions for the buyer and seller. Moving paper around, instead of moving cash, a swap. Instead of borrowing funds to buy bce shares, kkr assumes bce long-term debt, in exchange for bce shares. Alternatively, kkr could borrow 18 billion, to pay bce, to cancel current long debt; kkr owes 18 billion either way.
Super banks important in future refinancing funding issues around bce's debt; therefore, why lend an astronomical amount of funds, when an equivalent deal can be brokered with significantly less funds fronted, and the bank receives the same collateral, that is now better. Note, also bank gains, as bce debt holders risk reduced. Mega borrowed leveraged buy-outs, never the same again, with super banks using deal end-point equivalence rational.
[Large pension plans and super banks, partly the same group, wearing different hats; the proposed Bell Canada Enterprises privatization leveraged buyout, second biggest in world, termed by press. Therefore, it does not matter that the pension plans and teachers saying citibank -- or citibank saying pension plans and teachers -- holding the bag in a bce leveraged buy-out 50 billion dollar chapter 11 -- same result. The external mega leverage buy-out deal, not adding value to the company bce itself; whereas dealing with bce directly, increases bce tangible book value per share.]
[Pension plan, debt stockification swap externalities. Pension plans are shareholders in same public companies reborn into balance sheet strong, debt-free blue chip enterprises. Debt stock swaps increase opportunities for pension plans to obtain large blocks of stock through leverage. Large blocks of stock are inflation hedges for pension plans' massive liquidity.]
Little extra for BCE ~~~~~~~~~~~~~~~ Best market, multiple buyers of large blocks of stock. Reduce size of debt stock swap deals: i.e., sell 2 billion in debt for 45 a share, or 10 billion at 40 a share, or all at 35. Currently BCE is trading at 40.
Swap large blocks of stock, in small debt stock swap deals first, then swap remaining debt with special discount.
Pension funds would have made more, if deals done before BCE headed up. Yet, as Pension funds, are also BCE shareholders, all good.