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Attention Business Editors:

Retail Noteholders Seek Immediate Relief as Condition for Governments Provision of ABCP Backstop Guarantee

  TORONTO, Dec. 22 /CNW/ - The media has announced this morning that the Federal, Quebec, Alberta and Ontario Governments have committed to agree to provide approximately $3.5 billion of additional margin facilities to enable the completion of the ABCP Restructuring Plan (sometimes referred to as CCAA Plan, or Plan).

The ABCP retail noteholders applaud this government initiative as a first step for certain retail noteholders that hold less than one million dollars of the ABCP securities to obtain relief under certain broker-sponsored relief programs conditional on the closing of the CCAA Plan.

While it is reported that the ABCP retail noteholders will get access to their money in January 2009, the details of the announced government support have not been publicly disclosed. Further, any Government support that is committed to aid the Restructuring Plan will only have its desired effect if the Plan closes. The closing of the Plan is contingent upon the international banks being completely satisfied with the Government support. Should the international banks not be satisfied with the pledged Government support, the Plan will likely not close, and thus, any full settlement relief programs (currently, only for retail noteholders that hold less than $1 million) will not come to fruition.

The ABCP retail noteholders (that is, those that own greater than and less than $1 million of the ABCP Notes) are estimated to comprise about 1,800 persons/families owning about $400 million of Non Bank ABCP. After 16 months of delay, it is our strongly held view that all retail customers should be extracted from the ABCP Restructuring Plan, and receive from their securities dealers without further delay, full cash settlements without conditions and without dollar limitation.

The full cash settlements of the ABCP retail customers by securities dealers has to date been conditional upon successful implementation of the Plan, but is, by its terms, outside of the CCAA Restructuring Plan. Acceleration of payment to the retail noteholders through waiver of the Relief Programs condition precedent of Plan implementation is, thus, in no way, or could it be, disruptive to the successful implementation of the ABCP Restructuring Plan. The ABCP Restructuring Plan's successful implementation will continue to benefit the 99% of ABCP owners who are pension funds, governments and corporations.

The announced Canaccord Under $1 Million Retail Customers Relief Plan covers 1,435 persons/families owning $138 million. The Credential Under $1 Million Retail Customers Relief Plan covered 335 people/families and $39 million.

It is our strenuously held view that Government intervention to support the Plan utilizing public monies causes the Plan to no longer be a private sector agreement. In the public interest, the retail customers owning more than $ 1 million of Non Bank ABCP should receive full cash settlements from the applicable securities dealers who have not yet fully cash settled with all their retail customers, including those retail noteholders that own greater than $1 million of the ABCP Notes.

There is no legal basis for a below $1 million threshold, or any threshold or limitation, for retail customer remedies, and all retail customers (whether above or below $1 million) are legally entitled to the protections of the Know Your Client and Suitability Rules. It is thus our view that if the applicable Government officers are satisfied that the retail noteholders are being looked after as part of the Restructuring Plan, we respectfully submit that is a misperception in that only a segment of the retail noteholders potentially could obtain relief under the Relief Programs conditional upon the closing of the Plan. The published Relief Programs only cover approximately 45% of the retail noteholder group's dollar value exposed (45% = ($138mm + $39mm)/$400mm).

Accordingly, the Governments should utilize this propitious opportunity in connection with pledging their support for the Plan to make its support conditional upon a Relief Program for the greater than one million dollar retail noteholder group (the majority by dollar value of the retail group). This position is supported by strong public policy considerations because if public monies are utilized to resuscitate the Plan, then the most vulnerable class of noteholders, namely, all the retail noteholders (not just a segment) should obtain immediate and full cash relief in connection with the Governments' support of the Plan.

There is ample factual evidence to support the conclusion that all retail noteholders (including those greater than $1 million) have been sold this toxic commercial paper by the securities dealers in violation of the Know Your Client and Suitability Rules in the IIROC Rulebook and Provincial Securities Acts. The CCAA Restructuring Plan has omnibus legal releases that arguably deny the Securities Regulators and the IIROC to pursue remedies against these securities dealers on behalf of all retail noteholders for the damages on their life savings placed in Non Bank ABCP by their securities dealers in whom they are entitled to rely for suitable advice and products. Given the impending commencement of a complete bar to relief for the retail noteholders, and the related public policy concerns relative to the retail noteholders holding this toxic paper, it may be apparent that the present time, prior to pledging its support for the Plan, is the last and only chance for the respective governments to secure a full cash settlement for all the retail customers. Should this opportunity not be utilized to its fullest extent, many citizens may feel that its respective governments have abandoned those who fell victim to reckless securities practices by large well-heeled financial institutions that have not suffered any repercussions for their behavior. This could very well be characterized as a great injustice.

For further information: Henry Juroviesky, Barrister and Solicitor, Co-Counsel for the Ad Hoc ABCP Retail Holders Committee, Managing Partner, Juroviesky and Ricci LLP (Foreign Legal Consultants, Authorized to Practice U.S. Law), 4950 Yonge Street, Suite 904, Toronto, Ontario, M2N 6K1, (416) 481-0718 (Phone), (416) 646-7877 (Direct Dial), (416) 481-1792 (Fax), hjuroviesky@jruslaw.com, www.jruslaw.com; Diane A. Urquhart, Independent Financial Analyst for the Ad Hoc ABCP Retail Holders Committee, Mississauga, Ontario, Tel: (905) 822-7618, Cell: (416) 505-4832, urquhart@rogers.com

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