BCE defers the declaration of dividend

The takeover of Canada's largest telecommunications company has dragged on through competing bids, been given its blessing by shareholders, fought off a challenge from bondholders that went all the way to the Supreme Court and cleared regulatory hurdles.

But coming just before the emergence of a global credit crisis, paying for the deal has proven to be the most difficult wrinkle of all.

On Monday, BCE deferred the declaration of a dividend on the company's common shares for the second quarter of 2008.

The company said the money that would have been paid to shareholders will be kept by the company as it works to complete the proposed privatization.

A report has suggested that negotiations over financing could drag out until the end of the year due to stiff demands for concessions by the banks financing the acquisition.

A spokesman for BCE declined to comment on the report Monday, only saying the deal is expected to close "in the third quarter of this year," which would be by the end of September.

Reports have suggested that the banks are seeking to alter terms agreed a year ago.

Citigroup Inc., Deutsche Bank, Royal Bank of Scotland PLC and Toronto-Dominion Bank are providing financing for the deal's debt package.

Ali Mozaffari of bond rating agency Moody's said Monday that for TD Bank the package "could cause a large provision, but not one that is going to hurt its ratings."