BCE Inc. has sued the Ontario Teachers' Pension Plan and its partners for a $1.2-billion Canadian ($1 billion) penalty over the group's failure to complete its purchase of the Bell Canada parent company.
The suit filed in Quebec Superior Court on Wednesday named Teachers', Providence Equity Partners International and Madison Dearborn Capital Partners as defendants.
Canada's largest telecommunications company is demanding the group pay the $1.2-billion Canadian ($1 billion) penalty agreed to under the $35 billion deal _ which would have been the largest leveraged buyout in history.
BCE management had agreed to the deal in June 2007, just before credit markets began to unravel in North America.
"The failure of the deal to close on Dec. 11, 2008, was directly related to both the burden of the loan financing arranged by the defendants and a deterioration in the global market conditions, each of which was a risk borne by the defendants under the contractual agreement for the transaction," BCE said in its filing with the court.
The Teachers'-led group walked away from its deal to buy BCE last week after the company failed to meet a key auditors test, a solvency opinion.
However BCE accused the investor group of breaking off the deal on Dec. 10, a day before the key deadline for the deal to close and when the solvency opinion was due.
Canada's largest telecommunications company said it satisfied all closing conditions for the $42.75 Canadian per-share cash deal, other than the solvency opinion.
Teachers' was not immediately available for comment, but the investor group said last week that "under these circumstances neither party owes a termination fee to the other."
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