Friday, January 16, 2009

ABCP restructuring deal completed, to be implemented Jan. 21

(Canadian Press) A plan to restructure $32 billion in frozen asset-backed commercial paper investments has been finalized and will be implemented after the deal closes next week, says the committee in charge.

The Pan-Canadian Investors Committee, headed by Purdy Crawford, said late Friday that all legal documents have been finalized and signed to complete the plan.

It said final verifications are underway and that the court-appointed and monitor is expected to file the required certificate to close and implement the plan on Jan. 21.

Earlier this week, the Superior Court of Ontario approved the restructuring agreement and said many smaller investors should get their money back within the month.

Efforts to rescue the third-party ABCP - a form of debt that had been considered by many investors as a low-risk way to earn interest for a few months at a time - began soon after the market suddenly froze in August 2007.

The restructuring calls for holders of the notes, also called non-bank ABCP, to swap them for new notes that investors can hold or sell.

Most small investors will be fully refunded by the securities firms that sold them the ABCP. Larger institutional investors get the restructured notes.

An estimated 99 per cent of the notes are held by institutional investors, such as pensions and businesses, but about $400 million is held by an estimated 1,800 individual retail accounts.

About 30 families who invested more than $1 million in ABCP didn't receive a full settlement because of the size of their investments.

The restructuring prevents retail investors from suing over their investments, but there are discussions underway for them to seek a remedy.

The freeze-up of the ABCP market was one of the first tremors of the financial earthquake that would later reverberate around the world.

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