Credential deal on its way, Crawford says

Following Canaccord Capital’s lead, Credential Securities is expected to offer a similar asset-backed commercial paper settlement to affected retail investors, according to the chair of the Pan-Canadian Investors Committee, Purdy Crawford.

“We are reasonably optimistic it will be announced in the next few days,” Crawford told investors on conference call on Monday.

Last week, Canaccord brokered a deal with the backing of a third-party buyer that allowed 97% of their mainly retail investors to get their principal back on ABCP investments that had been frozen since August.

Canaccord had the largest proportion of retail investors with more than 1,400. However, Credential Securities, the investment arm of the Canadian credit union system, was likely next in line, with an estimated 335 families with more than $48 million invested in ABCP, according to independent investment analyst Diane Urquhart.

A number of investors participating in Monday’s conference call and asked Crawford directly what form the deal would take.

Crawford says he expects a deal where investors will be paid back the par value of their ABCP investments in cash sometime at the end of May.

“If my anticipation turns out to be right you’ll get all your money back and your interest,” he told one investor. “I think you’ll get cash sometime in late May and you can do what you like with it.”

Crawford did not explain whether Credential’s deal would be contingent on the Committee’s ABCP restructuring proposal being approved by note holders. This is a key component of Canaccord’s offer to its investors.

Credential officials would not comment on Crawford’s remarks, but their investors are hoping the speculation is true.

“I hope that I can trust [Crawford’s] comments that there is an offer in place this week,” says Murray Candlish, a semi-retired farmer from Daysland Alberta. Candlish has more than $350,000 of his retirement savings frozen with Credential.

He says despite the precedent set by Canaccord’s deal, many Credential investors are fearful they will not be offered a similar deal because there is only 10 days left until the planned restructuring vote on April 25. Even if they do receive an offer between now and then, it doesn’t give investors much time to properly assess an offer.

“The frustration and anxiety everyone is going through is enormous. I want Credential to know this isn’t a huge thing for them to put $48 million on the table. The sooner they do it the better because the days are slipping away quickly,” Candlish says. “If and when they do put something on the table the retail guys need to be able to trust it because they are going to be asked to vote yes [for the restructuring deal] and they need to know the cheque will becoming, in late May, as Crawford suggests.”

Filed by Mark Noble, Advisor.ca, mark.noble@advisor.rogers.com