Carrie Tait and Gordon Jaremko,
Financial Post and Canwest News
Tuesday, April 01, 2008
Layne Arthur does not have the heart
to tell his dad what has happened to
the proceeds from the sale of his
family farm. He invested the cash --
about $434,000 -- into non-bank
asset-backed commercial paper (ABCP),
and has now joined the ranks of
about 1,800 to 2,000 retail
investors fretting about what will
come of their investments.
"It was a third-generation farm that
I sold," Mr. Arthur said outside a
meeting room in a downtown Calgary
hotel, the fourth stop of the
cross-country tour by Bay Street
lawyer Purdy Crawford and his
"restructuring" committee attempting
to salvage value from the failed
"I haven't had the heart to tell my
dad," Mr Arthur said. "It would
break his heart."
The committee held Edmonton and
Calgary meetings on the tour that
includes distributing tonnes of
information books explaining the
market for ABCP and the rescue plan.
The tour concludes today in
Mr. Arthur, who also attended the
investor meeting in Edmonton in the
morning, is not only frustrated by
the losses he and others will likely
take because of the frozen market,
but also because he thinks the major
institutional investors -- as well
as Mr. Crawford's committee -- are
making it difficult for retail
investors to unite.
"They are doing their damnest to
make sure this thing passes" said
Mr. Arthur, part of a group trying
to collect the names of individual
investors and handing out
information outside of the meetings.
Mr. Arthur, an ex-trucker, said the
group has asked Mr. Crawford's
committee, Cannacord Capital Inc.,
and Credential Securities Inc., for
a list of retail investors holding
ABCP, to no avail.
In Edmonton, Vladimir Salyzyn, 78,
told the committee he kicks himself
for being out $900,000 because he
has a commerce degree, teaches
economics and should have known
better where to put his money.
Murray and Cindy Candlish told the
Edmonton session there was no hint
ABCP spelled trouble. The couple
reported their life savings of
$350,000, like Mr. Salyzyn's cash
from selling a farm, is locked away
from them in ABCP.
The certificates gave off no whiff
of risk until the moment they failed
because they only paid at best a
fraction of a percentage point more
interest than conventional savings
deposits, agreed Peter Myers.
"I was told it was triple-A rated
and guaranteed by the banks," said
the 64-year-old engineer, adding the
financial crisis that halted ABCP
withdrawals froze his "substantial"
retirement nest egg.
Retail investors own an estimated
$127 million in ABCP, or less than
four-tenths of 1% of a total
$35-billion in frozen certificates
representing money-market assets
from real estate mortgages to
receivable balances owing on credit
cards and auto lease contracts.
But the personal savings group will
have clout in a vote on the
restructuring plan April 25, said
committee member Stephen Halperin, a
MARK PENCE / CANWEST NEWS
Retired engineer Peter Myers
shows his frustration
yesterday while questioning
an ABCP panel in Edmonton
The court-supervised process
requires approval by a double
majority representing two-thirds of
total ABCP face value and 50% plus
one of its owners by head count.
"A note holder who has $1,000
invested has the same vote as a note
holder who has $1-billion invested,"
and personal investors "vastly
outnumber" institutional and
corporate owners, Mr. Halperin said.