TORONTO, May 13 (Reuters) - Coventree Inc COF.TO, the small Canadian structured-finance firm at the center of the credit crunch in Canada’s asset-backed commercial paper market, reported a lower second-quarter profit on Tuesday.
The company, whose commercial paper investment trusts ran into trouble last August, said its financial results continue to be “materially adversely affected by the disruption in the Canadian asset-backed commercial paper market”.
Coventree said its net income excluding variable interest entities, or VIEs, was C$5.9 million ($5.9 million) in the quarter ended March 31. That is down 10.6 percent from a net profit of C$6.6 million in the same period last year.
Revenue excluding VIEs was C$17.7 million, 14.5 percent below the C$20.7 million reported in the year-before quarter.
The lower results were not a surprise as the company said in August that the disruption in the ABCP market, if it continued, would have a materially adverse effect on performance.
Coventree was the largest player in the Canadian market for ABCP that was not sponsored by the big domestic banks. It sponsored and administered various ABCP conduits, including Aurora Trust, Apollo Trust, Comet Trust, Planet Trust, Rocket Trust and others.
In August, when the Canadian market for third-party ABCP dried up, Coventree said the conduits in aggregate had about C$15 billion outstanding.
Coventree has said that when an ABCP restructuring plan proposed by an investor committee is complete, its administration business unit — one of three units — will likely have no further business.
The judge overseeing the restructuring plan said on Tuesday he will try to rule quickly on whether the plan should go ahead without changes or whether he will make changes that would clear the way for lawsuits.
$1=$1.00 Canadian Reporting by Frank Pingue; Editing by Peter Galloway