Monday, February 4, 2008

Mr. Crawford hosts press briefing on ABCP restructuring plan

By: Daryl Ching, Clarity Financial Strategy

Today, Mr. Crawford’s Committee held a conference call to provide an update on the ABCP restructure. The standstill agreement has been extended to February 22, and the restructure is still scheduled to be completed in March 2008. While the noteholders of Devonshire had previously elected not to participate in the Montreal Accord, they will now be considered for the standstill agreement. Bank of Montreal, CIBC, Royal Bank, Scotiabank have each agreed in principle, subject to the satisfaction of certain conditions, to participate in the margin facility. The Committee has appointed BlackRock to be Administrator and Asset Manager. The Committee expects to provide a restructure plan for investors to vote on by the end of February.

The press asked a series of questions to which most received indirect responses. There was no comment on the dollar amount committed by the banks or the conditions for them signing on. The committee has still not finalized the index that will be used for the spread-loss trigger. When asked who had seen the data at this time, Mr. Crawford commented “mainly JP Morgan” and the Committee went on to describe the process of the how the data will be released to investors in the future. When asked about TD Bank’s lack of involvement, Mr. Crawford responded with “No comment. They have been cooperative.”

However, there were a few issues that were clarified. While the Crawford Committee had promised a “liquidity tranche” to provide relief to the investors in the interim back in November, it has been confirmed that this will not be available before the conclusion of the restructure. Liquidity will only be offered at the close of the restructure, whether it is in the form of bonds to be traded in the secondary market or lending from financial institutions.

It was also clarified that if the Committee is successful in securing 66 2/3 majority, the terms and conditions of the restructure will be binding on all parties involved. In this scenario all the investors will have the benefit of the restructured notes and waive their right to sue the parties involved. This may be the answer to a very interesting question that I had. If the restructure proposal is being voted on at the end of February and you need to give everyone at least 30 days to review the proposal and vote, how does the committee still expect to complete the restructure in March? Is it because the Committee will achieve supermajority approval before the proposal is sent out for wide distribution to investors?

1 comment:

windyfield said...

Based on the premise of forcing this proposal down the throats of all investors if 2/3 agree. It would seem prudent for investors to start any legal action now and get a restraining order against this before we get the new worthless paper....