BCE investors boost price but remain cautious

Shares of the country's largest telecommunications company surged in heavy trading Monday on the first day since the Supreme Court handed Bell Canada's parent a huge legal victory.

Although the legal risk has waned, concern about financing the world's largest leveraged buyout short-circuited the drive for BCE shares to reach the offer from the Ontario Teachers' Pension Plan and its U.S. partners.

"Obviously investors are weighing in the risks," said telecom analyst Troy Crandall of MacDougall, MacDougall & MacTier.

"They're weighing in the higher risks that there may be problems negotiating the terms of the loans."

On Monday, BCE said it has received written confirmation from Industry Canada that all of the conditions in an April decision approving the proposed acquisition of have been fulfilled, the last regulatory hurdle for the deal.

The banks--Citigroup, Deutsche Bank, Royal Bank of Scotland and Toronto-Dominion Bank--have said they remain committed to financing the deal.

However, the various groups "continue to negotiate the financing documents," and the scheduled close of the deal--originally set for early this year, then delayed to June 30--has been set back to sometime before the end of September.

While some investors may have been comforted by the banks' response to the court ruling, it was "eerily similar" to the comments made before the Clear Channel leveraged buyout was repriced lower in the United States, Crandall said in an interview.

Crandall believes there is an 80 percent chance the deal will close at the original price.