June 12, 2008 / 2:28 PM / 10 years ago

Canaccord swings to a loss on ABCP costs

TORONTO (Reuters) - Canadian investment bank Canaccord Capital CCI.TO said on Thursday it swung to a loss in the fourth quarter as it booked costs associated with the buyback of frozen commercial paper from its retail clients.

Canaccord said it lost C$35.2 million ($34.5 million), or 80 Canadian cents a share, for the three months ended March 31. That compared with profit of C$26 million, or 54 Canadian cents a share, a year earlier.

The firm, based in Vancouver, British Columbia, took a previously announced after-tax charge of C$39.6 million, or 82 Canadian cents a share, for its portion of a plan to buy back nonbank asset-backed commercial paper from more than 1,400 individual clients.

It subsequently issued 6.7 million shares in a C$69 million equity financing.

Canaccord wrote down C$4.2 million related to the ABCP that it holds, reflecting the company’s view of market conditions and the limited liquidity of the notes.

Excluding the charges and adjustments, net income for the quarter would have been C$7.2 million, or 15 Canadian cents a share, the company said.

An anonymous third party is participating in Canaccord’s ABCP relief program, which will cost up to C$138 million in total.

The asset-backed commercial paper was issued by about two dozen nonbank-sponsored trusts and it froze up last summer in the early days of the credit crunch.

A restructuring plan that will see new notes issued to investors was approved by an Ontario court last week, but some corporate noteholders are appealing the decision.

Canaccord retail clients may see their money in mid-July, depending on the timing of an appeal, the company said on June 6.

($1=$1.02 Canadian)

Reporting by Leah Schnurr; Editing by Peter Galloway

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