Philip Ling, Canwest News Service; With files from the
Saturday, December 27, 2008
The federal government, in co-ordination with the Ontario, Quebec and
Alberta governments, has agreed to provide $4.45-billion in backstops to
ensure the $32-billion restructuring of insolvent commercial paper
In confirming late on Wednesday that all key stakeholders were in
agreement, the announcement by the committee overseeing the
restructuring raises hope investors who have had their asset-backed
commercial papers frozen for the past 16 months could get access to
their money as early as mid-January.
"We are ... pleased to have crossed a major hurdle in completing the
restructuring plan," said Purdy Crawford, chairman of the committee set
up to resolve the crisis.
"As a result of these latest developments, we can begin the process of
completing this restructuring."
The committee leading the court-supervised re-organization of ABCPs had
originally requested a $9.5-billion standby facility from the federal
Ottawa had been in talks this month with the provinces to seek their
participation in contributing to the line of credit. Those three
provinces have Crown-owned entities that hold the insolvent commercial
paper, led by Quebec's big pension fund, the Caisse de depot et
The government support "were vital for the conclusion of this
agreement," said Fernand Perreault, Caisse's acting president. "The
closing of the restructuring plan is very much in sight."
Jim Flaherty, the Finance Minister, said he would have preferred it if
the government did not have to provide financial backing to support a
deal to restructure frozen ABCPs held by Canadians.
"This was a private sector created problem, and I would have preferred a
private sector solution," Mr. Flaherty said.
"Having said that, as minister of finance I am responsible for the
systemic integrity of our financial system in Canada and my conclusion
was that we needed to participate."
Jim Flaherty, the Minister of Finance, said yesterday: "I would like to
commend all participants for their collective patience and hard work.
The agreement will provide a stable and effective result for investors
and asset providers." He confirmed Ottawa's contribution of
"The government's decision to support this restructuring plan reflects
its ongoing commitment to protect financial stability and ensure the
health of Canada's capital markets in these very challenging times," he