Duncan Mavin, Jim Middlemiss And
Friday, March 28, 2008
As Purdy Crawford gets set to meet
face-to-face with retail investors
in Canada's asset-backed commercial
paper market, he warned they will
get little back on their investments
unless a proposed restructuring goes
through as planned, while also
hinting there may be a sweetener for
the out-of-pocket investors.
If the plan fails to get the
go-ahead, retail investors "get damn
little," Mr. Crawford said
yesterday. "That's not a threat.
It's a reality."
Lawyer Purdy Crawford, seen
yesterday in Toronto, said he had
not realized the number of ordinary
Mr. Crawford is head of a committee
that has tabled a restructuring plan
for the $32-billion of frozen paper.
The success of that plan now rests
with hundreds of small investors who
have the chance to vote on it at the
end of April.
While the plan has the backing of
holders of most of the paper by
dollar value, many of the smaller
investors are thought to be against
the plan that will see them take a
big haircut on their initial
They will also lose the right to sue
the people who sold them the notes
in the first place.
Significantly, the retail investors
will have the final say in a vote
that requires approval by more than
50% of the voting noteholders, which
gives the little guys a lot of
"Because of the vote, the retail
investors have the possibility of
getting more on the table than what
this rather good restructuring gets
them," Mr. Crawford said in an
He begins a cross-Canada road show
in Toronto on Monday, when he will
meet with small investors in a bid
to get a yes vote.
Mr. Crawford expressed sympathy for
retail investors and said he was
unaware until recently how many
ordinary Canadians had bought the
His team, which includes bankers and
lawyers, also hinted yesterday that
there could be a sweetener in the
deal to make sure the vote goes
He would not give clear details of
what this could mean, although the
Crawford team said liquidity was a
key issue for small investors, and
also said a third party could be
involved in the next twist to the
"Keep your eyes and ears open," Mr.
Crawford said. "All kinds of things"
could be considered to help retail
investors out, he added.
A top-up to make small investors
whole seems unlikely, though one
option could be for companies that
sold the paper to make up some of
the difference between the par value
and the market value of the
restructured notes, sources said.
A source close to the restructuring
said the Street is expecting some
kind of "wrinkle to be put in the
plan for small investors." There are
a number of scenarios being bandied
about. "Purdy doesn't want to tip
The proposed restructuring, which
has put the notes into Companies'
Creditors Arrangement Act
protection, could be amended to
accommodate a change to the terms in
favour of retail investors, legal
"I'm rather confident small
investors will be able to take
advantage of their bargaining
power," Mr. Crawford said.
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