Retail Noteholders Seek Immediate Relief as Condition for Governments Provision of ABCP Backstop Guarantee

    TORONTO, Dec. 22 /CNW/ - The media has announced this morning that the
Federal, Quebec, Alberta and Ontario Governments have committed to agree to
provide approximately $3.5 billion of additional margin facilities to enable
the completion of the ABCP Restructuring Plan (sometimes referred to as CCAA
Plan, or Plan).
    The ABCP retail noteholders applaud this government initiative as a first
step for certain retail noteholders that hold less than one million dollars of
the ABCP securities to obtain relief under certain broker-sponsored relief
programs conditional on the closing of the CCAA Plan.
    While it is reported that the ABCP retail noteholders will get access to
their money in January 2009, the details of the announced government support
have not been publicly disclosed. Further, any Government support that is
committed to aid the Restructuring Plan will only have its desired effect if
the Plan closes. The closing of the Plan is contingent upon the international
banks being completely satisfied with the Government support. Should the
international banks not be satisfied with the pledged Government support, the
Plan will likely not close, and thus, any full settlement relief programs
(currently, only for retail noteholders that hold less than $1 million) will
not come to fruition.
    The ABCP retail noteholders (that is, those that own greater than and
less than $1 million of the ABCP Notes) are estimated to comprise about 1,800
persons/families owning about $400 million of Non Bank ABCP. After 16 months
of delay, it is our strongly held view that all retail customers should be
extracted from the ABCP Restructuring Plan, and receive from their securities
dealers without further delay, full cash settlements without conditions and
without dollar limitation.
    The full cash settlements of the ABCP retail customers by securities
dealers has to date been conditional upon successful implementation of the
Plan, but is, by its terms, outside of the CCAA Restructuring Plan.
Acceleration of payment to the retail noteholders through waiver of the Relief
Programs condition precedent of Plan implementation is, thus, in no way, or
could it be, disruptive to the successful implementation of the ABCP
Restructuring Plan. The ABCP Restructuring Plan's successful implementation
will continue to benefit the 99% of ABCP owners who are pension funds,
governments and corporations.
    The announced Canaccord Under $1 Million Retail Customers Relief Plan
covers 1,435 persons/families owning $138 million. The Credential Under $1
Million Retail Customers Relief Plan covered 335 people/families and $39
million.
    It is our strenuously held view that Government intervention to support
the Plan utilizing public monies causes the Plan to no longer be a private
sector agreement. In the public interest, the retail customers owning more
than $ 1 million of Non Bank ABCP should receive full cash settlements from
the applicable securities dealers who have not yet fully cash settled with all
their retail customers, including those retail noteholders that own greater
than $1 million of the ABCP Notes.
    There is no legal basis for a below $1 million threshold, or any
threshold or limitation, for retail customer remedies, and all retail
customers (whether above or below $1 million) are legally entitled to the
protections of the Know Your Client and Suitability Rules. It is thus our view
that if the applicable Government officers are satisfied that the retail
noteholders are being looked after as part of the Restructuring Plan, we
respectfully submit that is a misperception in that only a segment of the
retail noteholders potentially could obtain relief under the Relief Programs
conditional upon the closing of the Plan. The published Relief Programs only
cover approximately 45% of the retail noteholder group's dollar value exposed
(45% = ($138mm + $39mm)/$400mm).
    Accordingly, the Governments should utilize this propitious opportunity
in connection with pledging their support for the Plan to make its support
conditional upon a Relief Program for the greater than one million dollar
retail noteholder group (the majority by dollar value of the retail group).
This position is supported by strong public policy considerations because if
public monies are utilized to resuscitate the Plan, then the most vulnerable
class of noteholders, namely, all the retail noteholders (not just a segment)
should obtain immediate and full cash relief in connection with the
Governments' support of the Plan.
    There is ample factual evidence to support the conclusion that all retail
noteholders (including those greater than $1 million) have been sold this
toxic commercial paper by the securities dealers in violation of the Know Your
Client and Suitability Rules in the IIROC Rulebook and Provincial Securities
Acts. The CCAA Restructuring Plan has omnibus legal releases that arguably
deny the Securities Regulators and the IIROC to pursue remedies against these
securities dealers on behalf of all retail noteholders for the damages on
their life savings placed in Non Bank ABCP by their securities dealers in whom
they are entitled to rely for suitable advice and products. Given the
impending commencement of a complete bar to relief for the retail noteholders,
and the related public policy concerns relative to the retail noteholders
holding this toxic paper, it may be apparent that the present time, prior to
pledging its support for the Plan, is the last and only chance for the
respective governments to secure a full cash settlement for all the retail
customers. Should this opportunity not be utilized to its fullest extent, many
citizens may feel that its respective governments have abandoned those who
fell victim to reckless securities practices by large well-heeled financial
institutions that have not suffered any repercussions for their behavior. This
could very well be characterized as a great injustice.

For further information: Henry Juroviesky, Barrister and Solicitor,
Co-Counsel for the Ad Hoc ABCP Retail Holders Committee, Managing Partner,
Juroviesky and Ricci LLP (Foreign Legal Consultants, Authorized to Practice
U.S. Law), 4950 Yonge Street, Suite 904, Toronto, Ontario, M2N 6K1, (416)
481-0718 (Phone), [phone] (Direct Dial), [phone] (Fax),
[e-mail], www.jruslaw.com; Diane A. Urquhart, Independent
Financial Analyst for the Ad Hoc ABCP Retail Holders Committee, Mississauga,
Ontario, Tel: [phone], Cell: [phone], [e-mail]