TORONTO (Reuters) - Investors and banks trying to restructure the troubled Canadian market for non-bank asset-backed commercial paper have agreed to terms of a deal, the Globe and Mail newspaper reported on its website on Friday morning.
The report, citing unnamed sources, said that players signed off on a proposal late on Thursday night, and a restructuring committee will ask a judge to approve it.
The committee, led by veteran lawyer and former corporate executive Purdy Crawford, has taken longer than initially expected to iron out details of the complicated restructuring in this area of Canada’s short-term credit markets.
The committee has promised that investors will receive complete information on the restructuring
The Globe and Mail report said that the assets underlying the non-bank sponsored ABCP have an estimated average value of 80 cents on the dollar.
Large ABCP investors including Quebec pension fund manager Caisse de depot et placement, financial cooperative Desjardins Group and National Bank of Canada (NA.TO), the country’s sixth-largest bank, formed the investor committee last August, after Canada’s C$33 billion non-bank ABCP market ground to a halt.
Several times, the parties extended a “standstill” deal -- an agreement to take no action while attempts were underway to fix the illiquid market.
In the meantime, publicly traded companies and financial players have taken writedowns due to the questionable value of their ABCP holdings.
In late December, the investor committee produced a broad plan that would restructure various types of commercial paper conduits differently, depending on their underlying assets.
The parties have been working since that time on further details, legal language and necessary approvals that would conclude the restructuring.
Investment bank JP Morgan and law firm Goodmans LLP have been advising the investor committee.
Reporting by Lynne Olver; editing by Renato Andrade