BCE 3-month TSX chart

The Supreme Court of Canada has delayed its ruling Tuesday on the $52-billion takeover of BCE Inc.

Chief Justice Beverley McLachlin didn't say when the court would make a decision, but investors were hopeful the court would approve the deal.

BCE stock closed up $1.52 or 4.5 per cent at $35.05 in Toronto Stock Exchange trading.

The ruling is expected to determine the fate of what has been called the largest leveraged buyout in Canadian history, the $52-billion deal to privatize the telecom giant led by the Ontario Teachers' Pension Plan and its U.S. partners.

Their plan offered shareholders a big premium to their share price before the deal was announced, but that has cost bondholders $1 billion.

They challenged the transaction and lost in a lower court, but then won at the Quebec Court of Appeal in May. Now BCE is asking the Supreme Court to overturn that ruling.

Whose interests to protect?

Opening statements before the top court on Tuesday went to the heart of the issue: Whose interests must the directors protect?

The Ontario teachers' plan and the U.S. partners offered $42.75 a share last year, above BCE's market price, but plan to add $34 billion in debt to BCE to finance the deal. That has cut the trading price of some of the company's existing debt, angering bondholders.

'How can it be in the interest of the corporation to load it up with debt?'—Ian Binnie, Supreme Court justice

BCE counsel Guy Du Pont told the judges in Ottawa that directors have to do their best for the company and shareholders, but their obligation to bondholders is limited to paying interest and repaying the principal.

"There is no duty to consider beyond the contractual rights of the bondholders," he said.

Judges question takeover

A lawyer for a shareholder supported that position, saying investors took the risk and are entitled to the reward.

Several judges questioned the takeover. "How can it be in the interest of the corporation to load it up with debt?" Justice Ian Binnie asked.

"They were just peppering them with questions," the CBC's Havard Gould said.

Avram Fishman, a lawyer for the bondholders, which include TD Asset Management, CIBC and Manulife Financial Corp., argued they are not being treated fairly in the takeover.

He said the directors considered only the shareholders in agreeing to the bid by the teachers' plan.

On June 2, the Supreme Court agreed to an expedited hearing on the BCE case.

Because of the importance of the takeover and the nature of the issues, spectators were lining up for seats before dawn, Gould reported.

With files from the Canadian Press