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ABCP investors to sell votes to highest bidder

Duncan Mavin

Thursday, April 03, 2008

A lawyer representing some of the retail investors in Canada's asset-backed commercial paper debacle says his clients will resort to "non-traditional methods" to get their money back.

Nathan Denette/National Post

Henry Juroviesky says his clients will resort to “non-traditional methods” to get their money back.

  The lawyer said his clients have failed to persuade the committee that put together a workout plan for the frozen ABCP market to buy them out and they will now use alternative tactics, such as auctioning off their vote to the highest bidder in an upcoming ballot on the restructuring plan.

"The impression we gleaned from the Pan-Canadian committee was that they felt that they had no moral duties to the class of retail investors, and that a deal, that even if forthcoming, would most likely only benefit the persons needed to secure a successful vote on the restructuring." Henry Juroviesky said in a press release.

"Accordingly we felt that in order to maximize value for all our clients, we needed to look at creative ways to enhance the value of their notes. We feel that an auction of all my clients' economic interests would add significant value to those looking for an alternative to the proposed restructuring."

Mr. Juroviseky said his firm is now soliciting bids from private equity firms and hedge funds, who would be buying the voting and economic rights of his clients. Noteholders are scheduled to vote later this month on a bailout plan put together by a committee of Bay Street lawyers and bankers. The committee's chairman, Purdy Crawford, has been on a cross-Canada roadshow this week that was intended to persuade thousands of retail investors to sign up to his plan. However, he was met by angry investors many of whom said they wanted all their money back, rather than the restructured notes they have been offered, which are likely to trade at far less than 100 cents on the dollar.

The failure of the roadshow to persuade investors to sign up to the plan could lead to more challenges to the committee's proposal. The anger among retail investors was also felt in Ottawa. The House of Commons finance committee had put off holding hearings on the crisis pending the outcome of the roadshow. However, after it became clear this week that retail investors were not satisfied with the restructuring plan, the finance committee voted they will hold hearings likely to begin in the next two weeks. Mr. Crawford has agreed to attend the hearings.

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