Rogers Communications Inc. is facing opposition from some creditors over its plans to extend the deadline to wrap up the purchase of a smaller rival.

The Toronto-based cable and wireless firm is seeking approval from investors holding US$9.35 billion of eight series of bonds to extend the deadline to complete its acquisition of Shaw Communications Inc. The proposed change applies to five series of US dollar notes and three series of Canadian dollar notes, and requires the consent of a majority of holders.

Under the current terms, Rogers has to repay the securities at 101 cents on the dollar if the $20 billion (US$15.4 billion) Shaw deal isn’t done by the end of this year. The merger has been delayed by Canada’s antitrust body, which has sued to block it, so Rogers is asking bondholders to extend the so-called special mandatory redemption clause to December 2023.

The company is offering to pay bondholders fees in return for their permission. But some don’t like the terms, according to a note Thursday from the Credit Roundtable, an industry group that represents the interests of bondholders. 

Investors in the US notes would initially be paid a consent fee ranging from US$23.50 to US$62.60 per US$1,000 in face value. They can receive additional fees of US$11.45 to US$31 if the merger doesn’t close by Dec. 31 and Rogers isn’t forced to repay the notes at that time. Owners of the Canadian notes are eligible for similar fees. 

Some creditors say the total consent fees are undervalued, especially since the bonds declined after the consent solicitation was announced at the end of trading on Aug 22. Bond investors in Canada say the fees should be paid to all holders, not merely those who agree to Rogers’ request. 

“We advocate that consent fees be paid to all bond holders that participate in the solicitation regardless of whether they consent to the changes,” the Canadian Bond Investors’ Association said in a statement. “It is our reading of the Rogers consent solicitation that the consent fees will only be paid to bond holders that provide a positive consent.”

 
SHORT DEADLINE

Rogers has set a deadline of 5 p.m. New York time on Aug. 31 for bondholders to give their consent. Bank of America Corp., Royal Bank of Canada and Bank of Nova Scotia are organizing the transaction.

The deadline doesn’t give investors enough time to examine the consent, especially given the thinner liquidity of the bond markets in August, the Credit Roundtable’s note said.

A representative for Rogers didn’t immediately reply to a request for comment. 

Rogers shouldn’t be able to optionally circumvent the SMR, the Credit Roundtable said in a note to members. The group held a call with investors Thursday and is now gathering feedback about whether there’s enough opposition to force Rogers to make changes, according to a person familiar with the matter.

Rogers may have pay to pay about $775 million to bondholders should it get 100 per cent acceptance from the creditors, Jerome Dubreuil, a telecommunications analyst at Desjardins Securities Inc., said in a note to investors.