ABCP restructuring plan approved

Holders of third-party asset-backed commercial paper (ABCP) overwhelmingly approved a restructuring plan in a vote on Friday.

Approximately 96% of the noteholders voted in favour of the plan to swap the ABCP for new longer-term notes. Only a majority was needed.

And noteholders with $28.8 billion worth of paper — more than 90% — approved the plan. A two-thirds majority was needed by holders of value.

The results of the vote will now be brought forward for consideration by the Ontario Superior Court of Justice for final sanction at a hearing currently scheduled for May 2.

“We are delighted by the results of today’s vote and will now proceed to a final hearing before the court,” says Purdy Crawford, chair of Investors Committee for Third-Party Structured ABCP. “If the court sanctions the plan as approved by noteholders, it should be fully implemented before the end of May.”

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Minister of Finance Jim Flaherty described the vote as a good example for others of a market-led workout without a government bailout using taxpayer dollars. “I am pleased that the vote on the restructuring plan put forward by the Pan-Canadian Investors Committee has now taken place,” he said in a statement. “A large majority of investors has expressed support for the restructuring proposal.”

Friday’s meeting was a far cry from the acrimonious launch of the “Canadian roadshow” in Toronto in late March, during which Pan-Canadian Investors Committee chairman Purdy Crawford was subjected to the anger and frustration of noteholders. While many retail investors were no doubt relieved to hear the outcome of the vote, the committee was reminded of the ill will the episode has created.

Retail investor Murphy Hull used the occasion to sum up his feelings about the outcome of the saga.

“I want this committee to know that notwithstanding the fact that I did vote for the plan because I don’t know what the future holds if the plan fails, I want this committee to know they have not caused justice for people like myself,” said Hull. He was roundly applauded by other noteholders.

“Obviously we have sympathy and empathy for gentlemen like Mr. Hull,” Crawford said afterwards. “On the other hand, he made the point rather eloquently that we’ve been making all along, that he voted in favour because of the consequences of failure. I wish we could do more for people like that, but as I keep saying, what we’re doing is the art of the possible.”

Retail investors will still have to wait to see their money, as the Superior Court must now sanction the plan. A hearing is scheduled for early May, which will be followed by a 21-day hold period for possible appeals. Absent appeals, new notes will then be issued.

Filed by Craig Sebastiano and Jody White, Benefits Canada.

(04/25/08)