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
"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
"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."
© The Vancouver Sun 2008