Wednesday, April 02, 2008
"I'm stuck like everybody else....I'm not working, and
I'd like to recover it."
WAYNE DUKE AN ANGRY CALGARIAN WHOSE MONEY WAS INVESTED IN ASSET-BACKED
From left, Stephen Halperin, Purdy
Crawford, Andrew Kresse and Adam Howard of the Pan-Canadian
Investors Committee meet Tuesday with investors whose money is
frozen in the asset-backed commercial paper fiasco.
It wasn’t a happy crowd that turned out to
hear Bay Street lawyer Purdy Crawford and his Pan-Canadian Investors
Committee pitch their plan to breathe some life back into Canada’s
frozen $32-billion asset-backed commercial paper market.
Retail investors caught in the fray, like Linda Paget, were clearly
perturbed prior to the start of the Calgary meeting — one of five
information sessions Crawford’s committee is holding across the country.
“I now have high blood pressure over all of this,” she said.
Paget said she has $130,000 stuck in assetbacked commercial paper (ABCP),
put there on the advice of Canaccord Capital Inc., a Vancouver-based
brokerage, who she said assured her it was a safe investment.
Linda Paget and Wayne Duke, who
spoke to the committee on Tuesday, have about $130,000 and
$200,000 respectively tied up in the troubled
Paget explained her husband died six years ago, and she doesn’t have
much of an income. “So that’s the problem,” she said.
About 100 people showed up for the meeting, where Crawford and his
committee presented the case as to why retail investors should consider
voting for the restructuring proposal on April 25.
Crawford’s team of lawyers and bankers has been working to remedy the
situation since last August, when the market for nonbank ABCP tanked
amid fears the notes were linked to U.S. subprime mortgages.
In his preamble, Crawford told the crowd he’s received many messages
from people about the potential hardships they’re facing as a result of
the ABCP woes. The committee has a great deal of sympathy and empathy,
“We don’t . . . control the other parties involved, but you can be sure
that we will be doing everything we can within reason to make the
results for the retail investor as positive as possible,” Crawford said.
There are an estimated 1,700 to 2,000 retail investors in Canada who
collectively hold about $350 million of ABCP.
Retail investors each get one vote on the restructuring deal, and so
have the power to scuttle it.
Many, like Paget, are angry because they were told the investments were
Others, like retiree Wayne Duke, said he got a rude awakening when he
discovered he has about $200,000 in ABCP.
“I’m stuck like everyone else,” he said. “It’s retirement money. I’m not
working, and I’d like to recover it.” Under the proposed restructuring,
new asset-backed notes would be issued in place of the shortterm notes
frozen last August, but retail investors would have to wait about nine
years for the new longerterm notes to mature.
They’d also be worth less when they begin trading — some estimate 40
cents to 60 cents on the dollar.
Saying yes to the deal also means retail investors give up their right
to sue those who sold them the ABCP in the first place — a concession
the committee said was necessary to realize the restructuring proposal.
This clearly didn’t go over well with one investor, who told the
committee he has, on behalf of his mother, $150,000 frozen in ABCP.
The investor said he was troubled by the lack of certainty that goes
with the proposed restructuring.
“For someone like me, in exchange for the certainty I can understand
giving up my legal right to sue, but I don’t really have very much more
certainty now than I did before. So as it stands today, I will
absolutely be voting it down,” he said to a round of applause.
is getting lost in this whole thing"
Lawyer Peter Linder, who represents oil and gas companies with more than
$70 million locked up in ABCP, argued under the proposed restructuring,
his class of creditors should have their own votes.
Instead, they are being grouped in one class with everybody else — which
means his clients have no bargaining power.
“What that means is that my oil and gas companies that I represent,
their vote is getting lost in this whole thing,” he said following the
Brian Hunter, vice-president of Montane Resources Inc., has about
$650,000 tied up in ABCP.
Hunter, who started a group on Facebook
where others caught in the debacle can commiserate, said he’s yet to
hear anybody who’s looked at the proposal in detail say they’d vote for
At the meeting, Hunter said he’ll vote
against the proposal. He wants all his money back.
“That’s my starting position. Why would I negotiate against myself?”