Coventree Announces Cost Reduction Measures

    Toronto Stock Exchange Symbol: COF

    TORONTO, Sept. 18 /CNW/ - Coventree Inc. (TSX: COF) today announced that
it is implementing cost reduction measures, including a significant reduction
in its workforce, in response to the continuing disruption in the Canadian
asset-backed commercial paper ("ABCP") market.
    The principal cost reduction measure being implemented is the elimination
of approximately 30% of Coventree's workforce. Coventree estimates that this
measure will result in approximately $1 million in severance and other costs
related to the reduction, all of which will be recorded during its fourth
quarter ended September 30, 2007.
    Other cost reduction measures that are being implemented include the
closing of Coventree's U.S. office in Denver, Colorado and a reduction in
premises at its office in Toronto, Ontario. In both cases, the office space is
leased by Coventree under long term leases, and Coventree plans to explore its
options to reduce and, if possible, eliminate future costs associated with
these office leases. However, there can be no assurance that Coventree will be
able to reduce its cost obligations associated with these leases and any
future costs not recoverable would be written off.
    Coventree continues to remain supportive of the efforts of the consortium
(the "Consortium") representing banks, asset providers and major investors in
ABCP which announced a proposal (the "Montreal Proposal") on August 16, 2007
to stabilize the Canadian ABCP market. Coventree is committed to working with
the Consortium and the related Investor Committee chaired by Mr. Purdy
Crawford to find a solution to the continuing market disruption on a timely
basis - the cost reduction measures being taken by the Company are not
expected to affect its ability to contribute to such a solution. However,
until the Montreal Proposal evolves into a detailed plan, Coventree is not
able to assess the Montreal Proposal's impact on Coventree and the
Coventree-sponsored ABCP conduits. In these circumstances, Coventree's board
of directors unanimously concluded that it is in the best interests of the
Company to implement the difficult but necessary cost reduction measures
referred to above. The Company wants to thank the departing employees for
their contributions to Coventree.
    The Company is continuing to assess the impact that the market disruption
may have on, among other things, its financial condition. One area of
investigation is certain loans or advances made by Coventree to
Coventree-sponsored conduits or other Coventree-sponsored SPEs in order to
support the transactions entered into by such conduits or SPEs. As a result of
the current market disruption, these loans and advances are being used and are
therefore impaired and, if the disruption were to continue, they could be
written off in their entirety. If the full amount of the loans or advances
were used or written off, the estimated result would be a net after-tax loss
to Coventree of approximately $3.5 million, which would be recorded in the
fourth quarter of fiscal 2007.
    Another area the Company is continuing to investigate is the intangible
assets associated with the acquisition of the remaining shares of Nereus
Financial Inc. ("Nereus") that was completed earlier this year. If the current
market disruption were to continue, it is likely that these intangible assets
would also be impaired and could be written off in their entirety. Whether
these intangible assets will be written off and, if so, the timing and amount
of any such write-off has not yet been determined by the Company. As at
June 30, 2007 Coventree carried approximately $13 million in such intangible
assets on its balance sheet and a corresponding future tax liability of $4.3
million. The net loss to Coventree for writing these assets off in their
entirety would be $8.7 million.
    Since the beginning of the market disruption, approximately $4.8 billion
of A notes issued by Coventree-sponsored conduits has matured, of which
approximately $1.3 billion of A notes were rolled-over by holders of existing
A notes. In addition, during that time, approximately $5.1 billion E notes
have matured, of which the vast majority has been extended and only a very
small portion has been rolled-over into new E notes. At this time, Coventree
continues to be unable to predict the full extent of the impact of the current
market disruption on its financial results, business, operations and financial
condition, including any impairment of assets in future periods.
    While Coventree sponsors and administers these ABCP conduits, the ABCP
issued by them are not obligations of Coventree or guaranteed by Coventree.
The assets in such Coventree-sponsored conduits are not owned by Coventree and
therefore cannot be used by Coventree in its business nor are they available
to meet the obligations of Coventree to its creditors. Similarly, the
liabilities of such Coventree-sponsored conduits are not obligations of
Coventree - the recourse of the debtholders of a conduit is generally limited
to the assets of that conduit.

    Forward-Looking Statements

    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 Coventree'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 press release are based upon what Coventree'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 press release and Coventree does
not intend, and does not assume any obligation, to update or revise these
forward-looking statements.

    %SEDAR: 00024386E

For further information:

For further information: Craig Armitage, The Equicom Group Inc., Tel:
(416) 815-0700 x278, Email:

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