Toronto Stock Exchange Symbol: COF
TORONTO, Aug. 14 /CNW/ - Coventree Inc. (TSX:COF) today announced that it
has filed its financial results for the three and nine months ended June 30,
Coventree's Interim Consolidated Financial Statements and accompanying
Management's Discussion & Analysis (MD&A) of Financial Condition and Results
of Operations are available under the "Coventree Owners" section of the
Company's website at www.coventree.ca and will be filed today on SEDAR at
The Company's third quarter MD&A contains a discussion of current
conditions in the Canadian asset-backed commercial paper (ABCP) market,
including a market disruption that occurred on August 13, 2007, which the
Company announced in its press release of the same date. On that date,
Coventree was unable to place new ABCP to fund the repayment of previously
issued ABCP that matured the same day. As a result of this market disruption,
Coventree extended the term of extendible ABCP (also known as E notes) in the
aggregate amount of $250 million issued by all Coventree-sponsored ABCP
conduits including Apollo, Aurora, Comet, Gemini, Planet, Rocket, Slate, SIT
III and SAT. Coventree also issued notices requesting funding under liquidity
facilities that support the liquidity-backed ABCP (also known as A notes)
issued by all such conduits other than Apollo in the aggregate amount of
$700 million. At this time, Coventree is unable to predict how long the
current market disruption will continue. The Company's conduits have A notes
and E notes maturing on a daily basis. If the market disruption continues,
Coventree, on behalf of its conduits, will have to extend additional E notes
and attempt to make further draws on its liquidity facilities.
Coventree sponsors and administers ABCP conduits that 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.
A notes are supported by liquidity facilities that are intended to
protect ABCP investors from a market disruption that prevents the redemption
and roll-over of their notes at maturity. These liquidity facilities are
typically provided by lenders who have a rating from DBRS Limited of
R-1(middle) or better. The facilities contain various conditions, including a
definition of what constitutes a market disruption, that must be satisfied
before a liquidity provider is obligated to fund under its facility. Although
Coventree has issued notices to liquidity providers under each of the
facilities referred to above for which the draw conditions have, in the
opinion of Coventree, been satisfied, there is no assurance that the liquidity
providers will fund or be obligated to fund under the requisite liquidity
agreements. Certain liquidity providers have advanced funding, some have
disagreed that they have an obligation to fund, some are in discussions with
the Company and some have not responded. If liquidity is unavailable under the
terms of the relevant facility or the liquidity providers do not fund as
required under the relevant agreements, that could lead to a default by a
conduit in respect of its issued and outstanding ABCP.
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. 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.
Coventree believes that, with the involvement of key industry
participants, this market disruption can be addressed through steps such as
the immediate injection of liquidity into the Canadian ABCP market and the
orderly sale of assets held by ABCP conduits; however, there can be no
assurance that any such steps will be implemented or, if implemented, that
they will address the current market disruption.
Even if the market disruption is addressed through the injection of
liquidity or other means, there can be no assurance that Coventree-sponsored
conduits will be in a position, at such time, to continue the issuance of
ABCP. If Coventree-sponsored conduits are no longer able to issue further
ABCP, such conduits will likely begin an orderly wind-down process.
Further, a market disruption means that Coventree will not be able to
issue new ABCP in order to fund new securitization transactions through
Coventree-sponsored conduits for its traditional securitization clients. As a
result, such clients are likely to pursue other funding alternatives.
In addition, holders of ABCP issued by Coventree-sponsored trusts that
incur losses may seek damages from Coventree in connection with such losses.
While Coventree believes that it will not have liability in respect of losses
suffered by ABCP holders, such holders may seek damages from the Company.
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 press release. 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 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 press release and
the Company does not intend, and does not assume any obligation, to update or
revise these forward-looking statements.
For further information:
For further information: Craig Armitage, The Equicom Group Inc., Tel:
(416) 815-0700 x278, Email: firstname.lastname@example.org