Tuesday, January 13, 2009

Canadian ABCP Investors Plan Dinners, Vacations After Swap Completed

(Bloomberg) Canadian investors who’ve been saddled with insolvent commercial paper for more than 17 months may get their money back as soon as this month after a court yesterday approved a plan to swap C$32 billion ($26.3 billion) of debt for new notes.

“I’m going to take my wife out for one big dinner on Valentine’s Day,” said Ron Lawley, 72, a retired
International Business Machines Corp. computer technician in Nanaimo, British Columbia, who had C$210,000 invested. “We may even take a vacation.”

About 1,765 individual investors stand to get back all of their investments, with interest, in the next few weeks after Ontario judge
Colin Campbell endorsed a plan to swap the asset- backed commercial paper for longer-term notes, most of which mature within eight years.

The restructuring will probably be done by Jan. 16 and the new notes will be distributed next week, said
Purdy Crawford, the Toronto lawyer who headed the committee that drafted the plan after the market for the paper collapsed in August 2007. Canaccord Capital Inc. and Credential Securities Inc. agreed in April to buy back about C$186 million of the debt they sold to clients once the process is done.

Before investors can be paid, thousands of documents must be signed by banks, brokerages and other parties, Crawford said. The committee rented the 33rd floor of the downtown Toronto office building housing law firm Goodmans LLP to host the signings, he said.

Champagne on Ice
“I’m hoping it’s done,” said Calgary engineer Brian Hunter, who used Facebook Inc., a networking site, to rally fellow investors from across Canada. “I still wouldn’t be chilling the champagne just yet. It ain’t over until it’s over.”

Canaccord, a brokerage based in Vancouver, said in a
letter yesterday on its Web site that it aims to deposit money into client accounts by Jan. 30. Vancouver-based Credential said it plans to pay back clients “as soon as possible” and not more than 20 business days after the restructured notes are distributed.

Not everyone will get their money back immediately. Holders of the debt include companies such as charter airline Transat A.T. Inc. and pension funds such as Caisse de Depot et Placement du Quebec, Canada’s biggest money manager. Those companies will need to hold the investments to maturity, or try to sell the notes in any secondary market that emerges.

“I’m pretty happy to have my money back, but I don’t like the way it happened,” said Layne Arthur, a 53-year-old resident of Sylvan Lake, Alberta, who invested C$434,000 in the paper through Canaccord.

Tree Planting
Other investors are just happy the restructuring is almost done, and are making plans for the return of their investments.

Jill O’Hara, a paralegal in Victoria, British Columbia, who faced the prospect of losing her home because her C$255,000 investment was frozen, said she’s afraid to spend too much money. She plans to splurge on some trees.

“I’m putting my garden together, which is a metaphor for putting my life together,” said O’Hara, 53, who may plant Japanese maples and Katsura trees.

Murray Candlish, a 51-year-old hog farmer in Daysland, Alberta, who invested C$350,000 through Credential, says he plans to pay off a loan. He was forced to borrow money to buy 160 acres of land when he couldn’t get his investment back.

Hunter bought a bottle of Australian red wine at a California supermarket in May to celebrate the occasion.

“I picked up a bottle of this Black Swan merlot,” said Hunter, 54, who held C$650,000 of the debt. The wine’s name reminded him of the best-selling finance book by U.S. author
Nassim Nicholas Taleb.

“It’s not a fancy wine, it’s $8 a bottle,” Hunter said. “I’ll drink that wine when I see the cash back into my account.”

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