Everyone's vote matters - One step closer to the finish line

By: Daryl Ching, Clarity Financial Strategy

I would characterize this as the longest 11th hour ever. It appears the Crawford Committee has filed an application in the Ontario Superior Court of Justice under CCAA to call a meeting of ABCP noteholders to approve the Committee's Plan. Assuming that the court approves this, a Restructure Plan will be mailed out to all noteholders and they will be given approximately 30 days to vote.

The most interesting aspect of this press release is that under CCAA provisions, the Plan must be approved by a majority of noteholders (regardless of the size of their holdings), as well as by noteholders representing at least 66 2/3% of the total aggregate principal amount. This means that the large institutional investors can no longer approve the Restructure Plan in accordance to the trust indenture, and everyone's vote will count. It is now extremely important for all noteholders to fully understand the implications of the Restructure Plan in order to make an informed decisions.

It is also interesting to see that the self-funded margin facility has increased from $8 billion to $8.5 billion. This means that either the Caisse has stepped up with more cash for the margin facility or the Committee was successful in bringing more investors to the table to self-fund the margin facility.

The Committee has reached more than 98.5% of the required margin funding facility, which suggests a shortfall of $210MM. The Globe and Mail had indicated that one of the Canadian banks had not given final approval for their commitment. Although the Committee has not disclosed the bank, we have reason to believe that it is TD Bank, due to the small commitment size. TD Bank had indicated that they still might support the margin facility, despite their lack of involvement in the non-bank ABCP market.