By Joe Schneider and Doug Alexander
Oct. 20 (Bloomberg) -- About C$32 billion ($26.8 billion) of Canadian
commercial paper will remain frozen another month because the global
financial crisis is delaying a restructuring, a committee overseeing the
The "large'' number of people and companies involved and the legal
complexity of the plan are also contributing to a delay in converting
the short-term debt to longer-term notes, the committee said in an
e-mailed statement today.
The delay means individual investors, whose money has been frozen since
August 2007 when a portion of the market for asset- backed paper in
Canada collapsed, will have to wait at least until the end of November
to get their money back.
"That's a pretty lame excuse,'' Layne Arthur, a Sylvan Lake, Alberta
resident, said in an interview. "There's all kinds of bargains out there
right now; I'd like to use my C$450,000 to buy some cheap stock.''
Arthur, 53, sold his family farm and put his money in asset- backed
commercial paper sold through Canaccord Capital Inc. The plan has been
delayed several times by court challenges and by negotiations among
investors and banks.
"It's absolutely, out-of-control pathetic,'' he said of the delay. "I'd
like to have a better reason.''
More than 1,750 investors holding C$186 million in the frozen debt are
waiting to get their money back, after Vancouver-based Canaccord Capital
and Credential Securities Inc. agreed in April to buy back the debt once
the plan is done.
Canaccord's "relief program'' remains fully funded and will be completed
seven to 10 days following the restructuring, Chief Operating Officer
Mark Maybank said today in a memo to investment advisers.
"We are extremely disappointed by this delay, and continue to encourage
swift implementation of the restructuring plan on behalf of our
clients,'' Maybank said.
Canada's highest court last month refused to hear an appeal by
drug-store chain Jean Coutu Group Inc. and other opponents of the plan,
clearing the way for the issuance of replacement notes.
Most of the C$32 billion in commercial paper is held by companies and
pension funds, which will be given new notes maturing within nine years
in exchange for the insolvent paper.
Purdy Crawford, chairman of the committee, said the volatility in global
credit markets has caused institutions and lawyers to be more conscious
of the documents, so it's taking longer to write them up.
"There's no showstoppers but unfortunately we can't move forward with
them,'' Crawford said in a telephone interview.
The volatility in the financial markets has also made it more difficult
to put a value on the new paper, Crawford said. When the conversion is
complete, investors should hold on to the paper until the markets calm
down, he said.
Crawford said he expects the restructuring to be finished next month.
"God, if it doesn't get completed by the end of November, I am going to
go to Africa and hide,'' he said.
The case is In the Matter of Metcalfe & Mansfield Alternative
Investments, C48969, Court of Appeal for Ontario (Toronto).
To contact the reporters on this story:
Joe Schneider in Toronto at
Doug Alexander in New York at +1- firstname.lastname@example.org
Last Updated: October 20, 2008 15:45 EDT