Going to Ottawa

About $93,000 of Beaver Creek's $183,000 capital expenditure fund invested with Canaccord is stuck in frozen ABCP. Steve Furino, Beaver Creek's Treasurer, has been asked to speak at the House of Commons finance committee's special hearing on ABCP tomorrow. Learn more in today's Globe and Mail or click the read more link.

Dealers work on ABCP relief as clock ticks on


April 9, 2008

With just over two weeks left before the April 25 vote on the plan to fix Canada's frozen, $32-billion commercial paper market, negotiations are down to the wire on deals that are expected to yield more money for small investors.

Vancouver-based brokerage Canaccord Capital Inc. was busy late yesterday trying to finalize a relief plan for about 1,400 of its customers who collectively hold $269-million of third-party asset-backed commercial paper that they haven't been able to unload since the market iced over in August.

And Credential Securities Inc., an investment dealer for the Canadian credit union system, is feverishly working on a relief plan for about 335 investors who are stuck with $48-million of ABCP. It said in a statement that it is "diligently working with various industry parties on a solution that will bring relief to our clients who are invested in the impacted asset-backed commercial paper market."

Toronto lawyer Purdy Crawford, who has been spearheading the sector's restructuring, met with Credential officials when he was in Vancouver last week. A team of officials from the dealer is understood to have been exploring a range of possibilities, including talking to potential buyers of its customers' frozen paper.

"While these discussions are not yet finalized, we are encouraged by the signs of progress," Credential said, adding that this continues to be its top priority. It has investment advisers in more than 135 credit unions in British Columbia, Alberta, Saskatchewan, Manitoba and Ontario.

Credential senior vice-president Elaine McHarg said yesterday that the goal is to find a plan that would deliver customers 100 cents on the dollar, although no assurances can be made. "That's what we're working towards," she said.

"We have a whole range of possibilities that we're looking at," Ms. McHarg added.

One of Credential's frustrated clients is Murray Candlish, a farmer in Daysland, Alta., who along with his wife, Cindy, has about $350,000 of retirement savings tied up in third-party ABCP.

Mr. Candlish is one of a handful of investors who have been asked by the House of Commons finance committee to speak tomorrow at a special hearing on ABCP. The committee will focus on individual investors in the sector.

Mr. Crawford was asked to attend but declined the invitation yesterday.

There are more than 1,800 individuals with money tied up in ABCP, and while they collectively hold only about 1 per cent of the frozen paper, they are key to the $32-billion market's future. The plan to fix the market is scheduled for a vote on April 25, and each investor gets one vote regardless of the quantity of frozen paper they hold.

A group of fewer than 20 major investors, including companies, pension plans and Crown corporations, collectively hold more than $21-billion.

Rob Merrifield, the Conservative chairman of the Commons finance committee, said in an interview yesterday that he would have preferred not to hold a hearing this week, but he was outvoted.

"I'm nervous about the committee getting involved in a private sector issue like this," he said, adding that he would have much preferred staying out of the issue until after the April 25 vote.

Another of the investors who will speak in Ottawa is Steve Furino, treasurer for the Beaver Creek Housing Co-operative in Waterloo, Ont., a mixed-income, 50-unit townhouse co-op. About $93,000 of its $183,000 capital expenditure fund invested with Canaccord is stuck in frozen ABCP.

Meanwhile, National Bank of Canada said yesterday that - assuming the restructuring plan for the third-party ABCP sector is approved - it will offer commercial and corporate clients better credit facilities until the new notes that they'll receive mature, which could be up to nine years. Clients who are able to hold the new notes to maturity are expected to recoup much of the paper's value.