Xceed Mortgage Expects ABCP Restructuring Plan Will Positively Affect Company's Financial Results

    -   Company expects to reverse $12-13 million pre-tax (about $8.7 million
        after tax) of previous write-off
    -   Implementation of the plan expected to result in improved costs of
        funds for about $1 billion of the company's $2.4 billion of mortgages
        under administration
    -   Lower cost of funding expected to result in improved margins and cash

    TORONTO, Sept. 8 /CNW/ - Xceed Mortgage Corporation (TSX: XMC), a
Canadian provider of insured mortgages, today said that it expects that the
restructuring plan for third-party asset-backed commercial paper (ABCP) will
positively affect the company's financial results.
    Xceed has reached agreement with the committee restructuring the
third-party ABCP as to the financial terms of the company's affected
securitization program. As a result of this agreement, if the plan closes as
projected, it will have a positive impact on the company's fourth-quarter
    "While the Canadian capital markets remain unsettled at least in part
because of the effects of the collapse of the ABCP market that occurred more
than a year ago, we expect that the restructuring plan, when implemented, will
positively affect Xceed Mortgage's financial results in several ways," said
Ivan Wahl, Chairman and Chief Executive Officer.
    "First, we expect that the implementation of the plan will result in an
improvement in the cost of funds for about $1 billion of the approximately
$2.4 billion of mortgages that Xceed has under administration. As we have
previously indicated, Xceed's profitability is directly affected by the size
of the spread margins associated with our mortgage product offerings. The cost
of capital used to fund the portfolio increased when the securitization agent
had to extend the term of the extendable ABCP. If the cost now declines, as it
is expected to with this restructuring, our margins and cash flow should
    "The plan also should provide more certainty in the capital markets and
therefore in our future financial performance," Mr. Wahl continued. "In our
fiscal 2007 fourth quarter, we took a significant write-off reflecting the new
valuation of our deferred net mortgage interest receivable on our balance
sheet. That write-off was based on the then necessary assumption that the
increased cost of funds would continue for the remaining term of the
    "Assuming this plan is implemented as proposed," he continued, "we expect
to be able to reverse a material amount of this write-off. Based on
management's current estimates, the reversal is likely between $12 million and
$13 million on a pre-tax basis (about $8.7 million after tax) and this would
be reflected in our 2008 fiscal fourth-quarter results with a positive impact
on our cash flow beginning in the fiscal fourth quarter in the order of
$2.4 million in the first month and about $500,000 to $600,000 per month
    "We are pleased that the restructuring plan of the ABCP was approved by
the Court of Appeal and are hopeful the process is moving towards successful
completion. However it does not mean that Xceed now is able to resume offering
uninsured, high-ratio mortgages. Sufficient financing for securitizing these
at an economic cost is still not available. Accordingly, for at least the
foreseeable future, Xceed will continue to focus on originating only mortgages
that qualify for insurance and sale to the Canada Mortgage Bond Program,"
Mr. Wahl said.
    Xceed Mortgage will be issuing its fiscal 2008 third-quarter and
nine-month financial results early on Thursday, September 11.

    About Xceed

    Xceed Mortgage Corporation, based in Toronto, is a Canadian provider of
insured residential mortgages that it originates in Canada. The company has
approximately $2.4 billion of mortgages and other assets under administration.
Xceed's shares are traded on the Toronto Stock Exchange (TSX: XMC). To find
out more about Xceed Mortgage Corporation, visit our website at

    Forward-Looking Statements

    Forward-looking statements in this document are based on current
expectations that are subject to significant risks and uncertainties. Actual
results might differ materially due to various factors such as the competitive
nature of the mortgage industry, the ability of Xceed to continue to execute
its growth and development strategy, and the reliance of Xceed on key
personnel. Xceed assumes no obligation to update these forward-looking
statements, or to update the reasons why actual results could differ from
those reflected in these. Additional information identifying risks and
uncertainties is contained in Xceed's regulatory filings available on its
website and at www.sedar.com.

For further information:

For further information: Investor and Media Relations: Richard Wertheim,
Wertheim + Company Inc., (416) 594-1600 (bus.), or (416) 518-8479 (cell),
email: wertheim@wertheim.ca

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