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MONTREAL - A late agreement between Clear Channel and its banks has raised questions in Canada about whether the existing US$52-billion privatization of BCE Inc. (TSX:BCE) may be re-priced lower and force new shareholder approval.

Joseph MacKay of Desjardins Securities says an agreement between Clear Channel and its private equity purchasers, which will reduce the takeout price by more than eight per cent, may put pressure on BCE to follow suit.

The Clear Channel deal is both good news and bad for BCE, he said.

The probability that BCE deal will be funded has increased since three of the banks - Citigroup, Royal Bank of Scotland and Deutsche Bank - are common to both deals.

"On the negative side, the probability of the BCE privatization being re-priced has also increased in our opinion," MacKay wrote in a report.

A discount of eight per cent would reduce the BCE takeout price to C$39.25 from the $42.75 offered by a consortium led by the Ontario Teachers Pension Plan and its U.S. private equity partners.

Since BCE has a stronger credit profile than Clear Channel, any re-pricing of Canada's largest telecom would likely be at a lower percentage, MacKay said.

"We would advise investors to assume a potential re-price in the five to 8.16 per cent range," he wrote.

But Elliott Soifer, vice-president of Desjardins Securities' international division, said he believes the BCE deal remains solid.

Clear Channel and BCE are very different businesses with unique takeover deals, he said in an interview.

"It's not illegal or impossible to re-price the deal, but it's much less likely than Clear Channel," Soifer said, adding that the banks would benefit by trying to renegotiate the deal to buy them time while credit markets are improving daily.

Soifer said he believes the prospective buyers of BCE are putting up more equity than Clear Channel and have done a better job negotiating most of the big things up front.

"It would surprise me if the same sort of credit structure was still left to be negotiated in BCE than was left to be negotiated with Clear Channel that left the banks doing what they did."

Any alteration to the deal could open a can of worms. It would delay closing of the transaction by at least three months until September and force a new shareholder's vote.

As in the case of Clear Channel, it could also prompt lawsuits.

A bondholder appeal to the Quebec Court of Appeal remains to be decided, and could end up before the Supreme Court of Canada.

The Canadian Radio-television and Telecommunications Commission also must confirm that changes offered by the prospective buyers of BCE meet its conditions to transfer its broadcasting licences to the investor group.

"All in, given the small nine per cent return (based on the current takeout price) and the risk associated with re-pricing, we believe that caution is warranted on BCE at current price levels," MacKay wrote.

BCE shares lost 16 cents to $38.94 in afternoon trading on the Toronto Stock Exchange. The stock has languished well below the offer price of $42.75 for months, due to uncertainty that the deal will close.