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Investors not impressed with ABCP proposal
But restructuring plan meeting also received hints more money might be offered


Fiona Anderson

Thursday, April 03, 2008

Investors who have hundreds of millions of dollars tied up in ill-fated asset-backed commercial paper made it clear Wednesday a restructuring plan was unacceptable, and they would be satisfied with nothing less than the full amount of their investment plus interest.

But they also received a glimmer of hope when the committee behind the plan came to Vancouver and told a three-hour investors' meeting there may be more money on the table.
 

  The plan proposes investors exchange their 30- to 90-day notes, which have been frozen since August, for notes maturing as late as 2017.

If they hold the notes to maturity, they may be able to recover the full amount of their investment. But if they need to sell, the notes will likely trade at a significant discount.

Yet despite the likelihood they will lose money on the investments, the investors will also lose their right to sue the brokerage houses that got them into the notes in the first place.

WARD PERRIN / VANCOUVER SUN

Angela Speller (middle) and other investors listen to Purdy Crawford explaining restructuring plan for holders of asset backed commercial paper investments.

 

Purdy Crawford, who chaired the restructuring committee, first hinted, then assured investors there would be more money on the table in addition to what was in the restructuring plan.

"Why am I presented with this sophisticated restructuring [of] which I understand absolutely not a thing?" asked Victoria resident Angela Speller, who along with her husband had invested 41 years of savings in the tainted notes through Canaccord Capital Inc. "I can't finance my children's education with that. I can't pay my house taxes with that.

"I want my money. I don't want coupons, Canadian Tire money, or Bre-X shares. I want my money plus my interest."

Crawford assured Speller and other investors who had the same message that the committee would do everything it could "to make what's available to you people a lot more than what will come to you from the restructuring."

"We're going to do the best we can to help you people, and I think there's sunshine over the hill for you," Crawford said.

In response to yet another investor asking why they couldn't be bought out and have the bigger players pay them the difference, Crawford responded: "That's what I've been trying to tell you all day -- that that's what's going to happen."

About 1,800 retail investors bought about $325 million in the frozen ABCPs through Vancouver-based Canaccord and Credential Securities Inc., the investment dealer for Canadian credit unions. That's a drop in the bucket compared to the $32 billion of ABCPs currently frozen in Canada and held mainly by institutional investors such as pension funds.

Yet under the proposal, the retail investors carry a big stick: For the plan to be approved, 50 per cent of noteholders must vote in favour of it at a meeting scheduled for April 25. And the retail investors outnumber institutional investors about 10 to one.

Without changes or added incentives, the retail investors will vote no, said Brian Hunter, a Calgary noteholder who has created an investors' group through Facebook and has retained lawyers to act on behalf of the group.

"This will be voted down if they don't sort it out," Hunter said. "And they absolutely need the retail folks to make it pass."

Crawford said: "We have the message loud and clear."

"These people have a lot of clout," he told reporters after the meeting.

"And we've said we'll do everything we can to achieve the results they would like, or close to the results they would like."

fionaanderson@png.canwest.com

The Vancouver Sun 2008
 

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