Investors Scrutinizing the Regulators

Home Page


Securities Regulation In CanadA

Fox Guarding the Hen House



Canadian Investors Push to Delay C$32 Billion Vote
By Doug Alexander and Sean B. Pasternak

April 10 (Bloomberg) -- Some Canadian companies saddled with commercial paper that hasn't traded since August are pushing to delay a vote on a C$32 billion ($31.5 billion) restructuring plan because they need more time to study it.

"I think the vote has to be postponed,'' said Peter Linder, a Calgary lawyer representing seven junior oil and gas companies with more than C$100 million of the insolvent debt. Linder said he will apply for an extension "imminently'' in Ontario Superior Court.

A group of institutional investors spent seven months drafting a plan to restructure asset-backed paper that stopped trading after investors shunned the debt on concerns about ties to U.S. subprime mortgages. The plan proposes to swap the 30- to 90-day paper into notes maturing within nine years. It requires the support of a majority of noteholders, as well as investors holding two-thirds of the face value of the debt.

Some investors say they only received the 360 pages of documents this week, and need more time to review them before the April 25 vote. Investors surrender the right to sue the brokers that sold the debt if they vote in favor of the plan.

"A request for an extension is reasonable and likely,'' said Colin Kilgour, a consultant advising investors holding the paper. "An extra month or so to make sure everyone has the opportunity to review and understand the situation is prudent.''

The investors' group, led by Toronto lawyer Purdy Crawford, submitted its plan covering 20 trusts to an Ontario court on March 17, and received bankruptcy protection for the investments.

Not Enough Time

Crawford's group has "not given the other noteholders enough time and information to properly respond to this filing,'' said Linder, who declined to name his clients.

"The material was late coming out,'' Kilgour said. "It's very complicated and many of the folks, particularly the folks who haven't had a buyout offer, still need to consider their options.''

Canaccord Capital Inc., a Vancouver-based brokerage, agreed yesterday to lead a bailout of 1,430 individual investors that may ensure their support for the plan. Canaccord and unidentified investors agreed to buy back as much as C$138 million in restructured notes at par. The bailout applies to 97 percent of Canaccord investors, who hold C$1 million or less, and excludes 43 clients holding a combined C$130 million.

Universal Uranium Ltd., a Vancouver-based miner with C$1.4 million in frozen debt, is talking to the companies that aren't covered by the Canaccord plan to consider legal action.

Full Time

"My full-time job today is to call around to the 3 percent that's left over and find out what they're going to do,'' Executive Vice President Bill Galine said in a telephone interview.

Some individual investors are also looking to postpone the vote, according to their lawyers. Toronto lawyer Arthur Jacques said he plans to ask the court for a delay to give his clients more time. Jacques is collaborating with Juroviesky & Ricci LLP, a Toronto-based law firm hired by Calgary investors Brian Hunter and Ted McFeely.

David Weiner, a spokesman for the Crawford group, said there are no plans to delay the vote.

To contact the reporter on this story: Doug Alexander in Toronto at; Sean B. Pasternak in Toronto at +1-

Last Updated: April 10, 2008 13:42 EDT

Click for more on ABCP