Investors Scrutinizing the Regulators

Home Page

InvestorVoice.CA


Securities Regulation In CanadA


Fox Guarding the Hen House

   

 

 
Canadian ABCP Group Announces Restructuring Changes

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 dalexander3@bloomberg.net

Last Updated: December 11, 2008 22:00 EST

Click for more on ABCP