The proposed C$34.8 billion (â‚¬21.908 billion) buy-out of Montreal-based incumbent Bell Canada (BCE) was supposed to be one of the world's biggest private equity deals ever. The deadline was 11th December. Now it looks unlikely to go through.
Auditors KPMG have warned that the level of debt after the buy-out could put the telecoms group into insolvency in current market conditions.
The Financial Times reports KPMG was hired to provide an independent opinion on the solvency provisions.
BCE shares fell almost 35% to C$25.06 in afternoon trading yesterday in Toronto.
The buy-out was announced in June 2007. It is led by the Ontario Teachers Pension Plan and two US private equity firms, Providence Equity and Madison Dearborn. If faced considerable opposition and had to win in court before being allowed to proceed.
Bell Canada promptly slashed 2,500 jobs ahead of the proposed buy-out.