Rogers Communications Inc. succeeded in extending a deadline to buy back US$9.33 billion of bonds, overcoming objections from some investors about terms of the deal.

The Toronto-based cable and wireless firm got approval from investors holding a majority of eight US and Canadian dollar bond securities to extend the deadline to complete its acquisition of Shaw Communications Inc. to December 2023, the company said in a statement. Under the original terms of the bonds, Rogers would have to repay the securities at 101 cents on the dollar if the $20 billion (US$15.2 billion) deal isn’t done by the end of this year.

Investors who agreed with Rogers’ proposal will be paid a consent fee, which in the case of its US dollar bonds ranges from US$23.50 to US$62.60 per US$1,000 in face value, according to terms of the consent released Aug. 22. 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. Some investors felt the fees should have been higher after the bonds sold off.

Owners of the Canadian notes were eligible for similar fees. Rogers is limiting the fee payments to creditors who held the bonds as of Aug. 19 at 5 p.m. Toronto time, under a so-called record date clause. 

Bondholders will receive about $520 million of initial consent fees, Rogers said in the Aug. 31 statement. That’s roughly equivalent to the high end of fees the company has to pay, according to estimates by Jerome Dubreuil, a telecommunications analyst at Desjardins Securities Inc. Rogers may have to spend up to $255 million, approximately, in additional complementary consent fees, the analyst said in a note to investors last week. 

The terms and timing of the Rogers proposal created a dilemma for bondholders who disliked it. If they refused to give consent for the changes, they could be denied a valuable payment.  

“There are very few rules regarding consent solicitations in the USD market. This creates all kinds of prisoners’ dilemma,” according to David Knutson, head of US fixed income product management at Schroders in New York and vice chair of the investor group Credit Roundtable. “Late August launch, short execution periods, early deadlines and the record date made the Rogers consent more complicated.”

The Rogers purchase of Shaw has been delayed by Canada’s antitrust regulator, which has sued to block it, arguing that it will damage competition in a telecommunications sector that’s already dominated by a handful of large companies. Rogers and Shaw have agreed to sell most of Shaw’s wireless business to Quebecor Inc. to address those concerns, but the case appears headed to a hearing at the Competition Tribunal, Canada’s merger court. 

Also, the Canadian Bond Investors’ Association said that the consent 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 CBIA said in a statement last week. “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.”