ABCP saga draws to orderly close

The Pan-Canadian Investors Committee for Third-Party Structured Asset-Backed Commercial Paper has announced the full implementation of its restructuring plan, which should thaw about $32 billion in frozen third-party ABCP.

“We are delighted to announce the successful completion after nearly a year-and-a-half of arduous negotiations, legal challenges and compromise during ever-changing credit market conditions,” said Purdy Crawford, chair of the Investors Committee.

Under the plan, large investors holding the affected ABCP will have the frozen assets exchanged for longer-term notes with maturities matching those of the assets previously contained in the underlying conduits. These longer-term notes will be delivered within three business days via normal CDS book entry procedures.

“I want to thank all committee members for their dedication and hard work over this prolonged period, as well as investors and other stakeholders for their patience and understanding over the past 17 months as we worked through the many challenges associated with this restructuring,” Crawford said.

Coventree Inc., the company that produced much of the affected ABCP, issued a statement on the impact of the plan. The company is free of any future legal liability in connection to its role as sponsor, administrative agent and financial agent for the ABCP conduits.

The firm will participate in the restructuring, providing some transitional administrative services over the coming four months, as the ABCP assets are rolled over into new special purpose vehicles.

It will collect about $9.4 million in fees for these services, which will be used to offset severance paid out in the quarter that ended September 30, 2008. The ABCP mess devastated the company, and it is in the process of being wound down. The ABCP restructuring plan has not changed this, but was seen as necessary to the orderly disintegration of the firm.

“The company will reduce its workforce, including senior officers, as and when their services are no longer required by the company to meet the company’s obligations under the transition services agreement or to complete the wind-down of the company,” Coventree said in a press release. “On satisfaction of its obligations under that agreement, the company expects to retain only a few employees required to finalize the orderly wind-down of the company.”

(01/21/09)