Dozens of Canaccord clients own $132M of ABCP
Three-month TSX trading in Canaccord Capital
Canaccord Capital Inc. has dozens of clients who own relatively large amounts of asset-backed commercial paper (ABCP), the troubled investment which has cost the investment dealer millions.
A Canaccord regulatory filing Tuesday noted the company has 1,480 clients who hold about $270 million of ABCP.
Most of those clients hold less than $100,000 worth each, and will get all their money back under a Canaccord deal to repurchase the ABCP.
But that deal is capped at $1 million per client, and there are still another 50 clients who are owed a total of about $132 million.
Moreover, Canaccord revealed that some ABCP clients have taken a loss on their investments. The company extended the buyback to people who held up to $1.31 million of ABCP — provided they capped their claim at $1 million.
Canaccord took a $39.6-million after-tax (82 cents a share) hit for ABCP in the final quarter of 2008. Its stock has fallen about two-thirds from its 52-week high of $22.49. It closed Tuesday up three cents at $7.65.
The company also said seven clients have started legal actions over ABCP, but all are covered by the court-approved ABCP plan, which includes ending claims against all the companies that sold ABCP, except for claims based on fraud.
The ABCP payouts are expected to start after the Ontario Court of Appeal rules on a challenge to the plan.
ABCP is a short-term debt product that bundled a variety of loans together, including U.S. subprime mortgages, and was then sold by dealers to investors.
When the subprime market began to fall apart last summer, the ABCP was frozen because there were no buyers for a product that might contain subprime junk.
The ABCP is still frozen — meaning holders can't get their money — and will be until the courts deal with the challenge.
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