TARA PERKINS AND BOYD ERMAN
April 8, 2008 at 9:12 PM EDT
With just over two weeks left before the April 25 vote on the plan to
fix Canada's frozen, $32-billion commercial paper market, negotiations
are down to the wire on deals that are expected to yield more money for
Vancouver-based brokerage Canaccord Capital Inc. was busy late yesterday
trying to finalize a relief plan for about 1,400 of its customers who
collectively hold $269-million of third-party asset-backed commercial
paper that they haven't been able to unload since the market iced over
And Credential Securities Inc., an investment dealer for the Canadian
credit union system, is feverishly working on a relief plan for about
335 investors who are stuck with $48-million of ABCP. It said in a
statement that it is “diligently working with various industry parties
on a solution that will bring relief to our clients who are invested in
the impacted asset-backed commercial paper market.”
Toronto lawyer Purdy Crawford, who has been spearheading the sector's
restructuring, met with Credential officials when he was in Vancouver
last week. A team of officials from the dealer is understood to have
been exploring a range of possibilities, including talking to potential
buyers of its customers' frozen paper.
“While these discussions are not yet finalized, we are encouraged by the
signs of progress,” Credential said, adding that this continues to be
its top priority. It has investment advisers in more than 135 credit
unions in British Columbia, Alberta, Saskatchewan, Manitoba and Ontario.
Credential senior vice-president Elaine McHarg said yesterday that the
goal is to find a plan that would deliver customers 100 cents on the
dollar, although no assurances can be made. “That's what we're working
towards,” she said.
“We have a whole range of possibilities that we're looking at,” Ms.
One of Credential's frustrated clients is Murray Candlish, a farmer in
Daysland, Alta., who along with his wife, Cindy, has about $350,000 of
retirement savings tied up in third-party ABCP.
Mr. Candlish is one of a handful of investors who have been asked by the
House of Commons finance committee to speak tomorrow at a special
hearing on ABCP. The committee will focus on individual investors in the
Mr. Crawford was asked to attend but declined the invitation yesterday.
There are more than 1,800 individuals with money tied up in ABCP, and
while they collectively hold only about 1 per cent of the frozen paper,
they are key to the $32-billion market's future. The plan to fix the
market is scheduled for a vote on April 25, and each investor gets one
vote regardless of the quantity of frozen paper they hold.
A group of fewer than 20 major investors, including companies, pension
plans and Crown corporations, collectively hold more than $21-billion.
Rob Merrifield, the Conservative chairman of the Commons finance
committee, said in an interview yesterday that he would have preferred
not to hold a hearing this week, but he was outvoted.
“I'm nervous about the committee getting involved in a private sector
issue like this,” he said, adding that he would have much preferred
staying out of the issue until after the April 25 vote.
Another of the investors who will speak in Ottawa is Steve Furino,
treasurer for the Beaver Creek Housing Co-operative in Waterloo, Ont., a
mixed-income, 50-unit townhouse co-op. About $93,000 of its $183,000
capital expenditure fund invested with Canaccord is stuck in frozen ABCP.
Meanwhile, National Bank of Canada said yesterday that – assuming
the restructuring plan for the third-party ABCP sector is approved – it
will offer commercial and corporate clients better credit facilities
until the new notes that they'll receive mature, which could be up to
nine years. Clients who are able to hold the new notes to maturity are
expected to recoup much of the paper's value.