Toronto Stock Exchange Symbol: COF
TORONTO, Aug. 16 /CNW/ - Coventree Inc. (TSX: COF) today announced that
on August 15, 2007 its conduits did not place any asset-backed commercial
paper ("ABCP"). Coventree does not know the extent to which this failure to
place any such ABCP was a result of the continuing ABCP market disruption that
began on August 13, 2007 or of the reported technical difficulties at the
depositary for its conduits' ABCP that prevented the processing of orders to
purchase such ABCP. Certain investors in ABCP issued by Coventree sponsored
conduits which matured August 15, 2007 advised Coventree that such investors'
attempts to roll maturing ABCP into new ABCP in Coventree's conduits were
unsuccessful. Accordingly, Coventree is unable to assess investor demand for
its conduits' ABCP on August 15, 2007.
As a result of the events of August 15, 2007, Coventree has, on behalf of
its conduits, extended the term of extendible ABCP (also known as E notes)
that matured that day in the aggregate amount of approximately $410 million
issued by its conduits including Aurora, Comet, Gemini, Planet, Rocket, Slate,
SAT and SIT III. This brings the total amount of E notes extended by the
conduits since August 13, 2007 to an aggregate of approximately $720 million.
On behalf of its conduits, Coventree has also issued notices requesting
funding under liquidity facilities that support the liquidity-backed ABCP
(also known as A notes) in Coventree-sponsored conduits including Aurora,
Comet, Gemini, Planet, Rocket, Slate, SAT and SIT III that matured August 15,
2007 in the aggregate amount of approximately $790 million. This brings the
total amount of liquidity requested by the conduits since August 13, 2007 to
an aggregate of approximately $1.6 billion. Coventree's conduits in the
aggregate have approximately $16 billion in fundings outstanding, of which
approximately $7.7 billion are A notes and $7.3 billion are E notes.
Coventree's conduits have A notes and E notes maturing on a daily basis.
If the market disruption or technical difficulties of the depositary continue,
Coventree's conduits will have to continue to extend maturing E notes and
attempt to make further draws on liquidity to retire maturing A notes.
While Coventree sponsors and administers these ABCP conduits, the ABCP
issued by them are not obligations of Coventree or guaranteed by Coventree.
The conduits are separate legal entities and the ABCP issued by the conduits
is non-recourse to Coventree.
A notes are supported by liquidity facilities that are intended to
protect ABCP investors from a market disruption that prevents the payment of
their notes at maturity. The facilities contain various conditions that must
be satisfied before a liquidity provider is obligated to fund under its
facility, including that (i) the rating of the liquidity-backed notes is
confirmed by DBRS Limited at R-1 (high) or R-1 (middle), as the case may be,
and (ii) there has occurred a market disruption as defined in the relevant
On August 15, 2007, DBRS Limited has again reconfirmed the applicable
outstanding ratings of the liquidity-backed ABCP issued by Coventree's
conduits and, accordingly, the credit quality of the underlying assets.
There is no assurance that the liquidity providers to whom notice has
been provided under A note facilities during the ABCP market disruption will
fund or be obligated to fund under the relevant liquidity agreements. If
liquidity is unavailable under the terms of a facility or the liquidity
providers do not fund as required under the relevant agreements, a default by
a conduit in respect of its issued and outstanding ABCP could occur. Under the
terms of the respective indentures governing the ABCP, upon a failure to pay,
the indenture trustee may give notice to the respective conduits that such
payments must be made within three business days, failing which an "Event of
Default" will occur in respect of the related conduit, which may lead to
acceleration of all obligations owing by the conduit. None of the Coventree
sponsored conduits has received any such notice.
Coventree's conduits have issued A notes that are supported by 14
different liquidity providers from whom the conduits have requested funding.
Of those liquidity providers, four liquidity providers, representing an
aggregate amount of approximately $1 billion in liquidity commitments,
provided total aggregate liquidity of approximately $129 million on August 13,
2007 and August 14, 2007. The balance of these liquidity providers have not
funded as requested. Six liquidity providers, including two of those that
initially provided funding (respecting an aggregate of approximately
$485 million of liquidity commitments), have now responded to the draw
requests disputing the conclusion that the events in the ABCP market since
August 13, 2007 satisfy the definition of a market disruption under the
applicable agreements. The remainder have not yet formally responded to the
draw requests. Given Coventree's inability to verify the funding status of all
ABCP conduits in Canada on a daily basis, Coventree has requested and will
continue to request draws on behalf of its conduits with respect to all
maturing A notes that are not refinanced in the ABCP market from the
applicable liquidity providers until normal funding operations resume or an
event has occurred that categorically precludes the conduits' rights to draw,
which includes the occurrence of an Event of Default or the loss of the
current rating of the applicable conduit.
E notes are not supported by liquidity facilities. The terms of E notes
provide for the automatic extension of the notes that, when combined with the
original term of the notes, can be up to 364 days in the event of a market
disruption. An extension is subject to the satisfaction of the condition that
nothing has happened to the conduit or its assets that would result in a
ratings downgrade. Investors are, in effect, providing the requisite liquidity
and receive a premium yield for bearing this risk. Investors receive a premium
interest rate during the extension period.
At this time, the Company is unable to predict the extent of the impact
of this market disruption on Coventree's financial results, operations, and
financial condition including any impairment of assets in future periods. The
current market disruption will adversely affect and may materially adversely
affect the future revenues of the Company. Coventree is unable to predict how
long the current market disruption will continue or the extent to which the
market disruption will affect the conduits' ability to raise funds to continue
to finance their operations.
This press release includes certain forward-looking statements, including
those identified by the expressions "may", "would", "could", "will",
"anticipate", "believe", "plan", "forecast", "estimate", "expect", "intend",
"aim", "vision", "mission", "endeavour" and similar expressions to the extent
they relate to Coventree or its leaders or management ("leaders"). The
forward-looking statements are not historical facts but reflect such leaders'
current expectations regarding future results or events based on information
currently available to the leaders.
These forward-looking statements are subject to a number of known and
unknown risks, uncertainties and assumptions. Many factors could cause actual
results, performance or events to differ materially from current expectations
that may be expressed or implied by such forward-looking statements,
including, without limitation, the matters discussed under "Risk Factors"
contained on pages 58 to 65 of the Company's Final Prospectus dated November
15, 2006 and in other sections herein and therein. Should one or more of these
risks or uncertainties materialize, or should assumptions underlying the
forward-looking statements prove incorrect, actual results, performance or
achievements could vary materially from those expressed or implied by the
forward-looking statements contained in this report. These factors should be
considered carefully and prospective investors should not place undue reliance
on the forward-looking statements. Although the forward-looking statements
contained in this report are based upon what the Company's leaders currently
believe to be reasonable assumptions, the leaders cannot assure prospective
investors that actual results, performance or achievements will be consistent
with these forward-looking statements. These forward-looking statements are
made as of the date of this report and the Company does not intend, and does
not assume any obligation, to update or revise these forward-looking
For further information:
For further information: Craig Armitage, The Equicom Group Inc., Tel:
(416) 815-0700 x278, Email: firstname.lastname@example.org