|Canadian ABCP Group Announces
By Doug Alexander and John Simpson
Dec. 11 (Bloomberg) -- The investors group charged with restructuring
C$32 billion ($25.9 billion) in insolvent Canadian commercial paper said
an agreement has been reached among “key participants” that would close
the process in January
The plan has been revised, proposing C$9.5 billion in additional
financial guarantees for the insolvent debt, bringing the total backstop
to C$39 billion, the committee said today in an e-mailed statement.
“The investors committee is currently canvassing external sources for
these additional facilities,” the statement said.
The committee is asking the Canadian government to close the financing
gap, the Globe and Mail reported, citing people with knowledge of the
matter. The agreement would likely be arranged to pay the government a
fee for providing the standby credit line, the newspaper said.
It’s likely that cost would be born by the ABCP investors in the form of
lower interest payments on new notes that would be swapped for the
frozen paper, the Globe and Mail said.
“The transaction enhancements we have proposed will allow participants
to meet their ratings objective, will allow a meaningful window of time
for our markets to normalize and will also provide substantial
additional flexibility if they worsen further,” said Purdy Crawford,
chairman of the investors committee.
The revisions, which still need formal approval, also include higher
thresholds for collateral calls to make defaults more remote.
To contact the reporter on this story: Doug Alexander in Toronto at
Last Updated: December 11, 2008 22:00 EST
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