Bought BCE.PR.A @ 22.00 CDN$

Today I bought some Bell Canada Enterprises (BCE) preferred shares (series AA), BCE.PR.A. BCE is being privatized in the largest leveraged buyout ever! Good timing, eh? Indeed the deal was signed and supposed to close this past summer, but some of the banks involved (Citi, Royal Bank of Scotland, Deutsche Bank) asked to delay the close until Dec 11 in the hope that the credit markets would be more receptive. (See NYTimes story)

The delay and the current state of the credit markets have led people to believe that the deal will be further delayed or cancelled. Consequently, the BCE common are trading well below the purchase price of 42.75 $. Similarly, the preferred shares are trading below their purchase price of 25.76 CDN$. (see BCE site here)

The reason I bought the preferred shares instead of the common is that the preferred shares are yielding 5.45% @ 22$/share. In contrast, the common's dividend was suspended. If the deal is delayed, I get paid for waiting. Not so with the common. If the deal is cancelled, BCE gets 1.2 billion $CDN in compensation. I expect that the preferred would soon go back to trading at its usual 25$/share, and I'd sell. Regardless, I get my 25$/share, the only question is when.