Judge approves ABCP plan

Investors left holding the bag on frozen asset-backed commercial paper may soon get access to their money after Superior Court of Ontario Justice Colin Campbell issued an order that restructuring plan be implemented.

The restructuring plan — which affects about $32 billion in frozen consumer debt instruments — is expected to close on or about January 16, 2009.

“After more than a year of patience and understanding on the part of investors, both large and small, and through the efforts and compromises of all the stakeholders around the table, we are very pleased to be entering this final phase of the restructuring,” said Purdy Crawford, chair of the Pan-Canadian Investors Committee for Third-Party Structured Asset-Backed Commercial Paper.

“While no one could have predicted the scope and extent of the challenges that we’ve faced along the way, we continue to believe in the benefits of this restructuring and are pleased that we are arriving at its long-awaited and successful conclusion.”

Under the plan, large ABCP investors will be given bonds which they can sell or hold to maturity in nine years, while retail investors — those with under $1 million of the paper — will receive cash.

The first interest payment to noteholders is expected to be made within three business days of the plan closing date. The costs of restructuring the troubled debt assets should be covered by deductions from the first interest payment, and are not expected to reduce future payments.

Other than in the case of any remaining noteholders holding physical certificates evidencing their ABCP, no further action is required by noteholders.

(01/12/09)