|
Sunday, October 12, 2008
|
|
|
|
Temp:
|
9°C
|
|
Feels like:
|
9°C
|
|
Humidity:
|
71%
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
Canaccord Capital shares hit new low as brokerage stocks get battered |
|
|
|
Written by David Friend, THE CANADIAN PRESS
|
|
Tuesday, 08 July 2008 |
Google Currency Converter
Related Items
No keywords found
TORONTO - Canaccord Capital Inc. shares (TSX:CCI) touched a new low Tuesday as brokerage stocks slid on the TSX, wearing further on the investment firm which is already facing lawsuits tied to asset-backed commercial paper.
Shares in the investment firm tumbled as low as $7.14 in trading on Tuesday, before closing up three cents at $7.65 on the Toronto Stock Exchange.
The stock has traded as high as $22.49 in the last year.
"Basically, the business environment for broker retailers is continuing to deteriorate. The expectation that there would be a cyclical recovery in the second half of this year is being questioned more and more," said Horst Hueniken of Thomas Weisel Partners Canada.
"To put it in plain language, earnings estimates for the whole sector are coming down and Canaccord is not excluded from that industry trend."
Another analyst, who asked not to be named, suggested that the market was also being reminded of Canaccord's legal troubles as part of disclosures in its annual information package.
Canaccord said seven clients are suing it over their entanglement in non-bank asset-backed commercial paper, a disclosure originally included in the auditor's report released in mid-June.
The firm - the largest retailer of the short-term paper which was regarded as a secure and liquid investment until the ABCP market seized up last August - said four of the clients who are suing are eligible to have most of their losses made good under Canaccord's relief program for holders of less than $1 million of ABCP.
It said the claims are without merit and it will defend itself vigorously, though the firm did not specify how much exposure the other clients had.
Canaccord said it also faces an eighth lawsuit from a small investor who was a client of an outside broker which bought ABCP through Canaccord.
The firm said it would be legally released from all eight actions under the ABCP restructuring plan proposed by the Pan-Canadian investors committee.
A key issue of the plan created by the committee, headed by Bay Street lawyer Purdy Crawford, is a "release" which would prevent lawsuits against banks, securities dealers and others involved in creating and selling the seized-up ABCP.
That plan was set up after buyers disappeared for Canadian non-bank ABCP amid last summer's sharp contraction in global credit market liquidity.
The committee plan which will convert the ABCP into long-term notes has been approved by a majority of noteholders and by the Ontario Superior Court, but these decisions are subject to appeal.
At March 31, Canaccord held ABCP with a par value of $42.7 million and an estimated fair value of $29.9 million, but "there is a significant amount of uncertainty in estimating the amount and timing of cash flows associated with the ABCP," the annual information firm noted.
"There is a risk that the company may not recover any of the estimated value of its investment in ABCP."
In addition to holding $42.7 million of ABCP as principal, Canaccord Capital has 1,480 clients holding affected ABCP with a maturity value of $270 million.
Of these clients, 1,430 hold $1 million or less of ABCP totalling $138 million, which Canaccord will repurchase at face value.
 |
|
Last Updated ( Sunday, 07 September 2008 )
|
|
|
Who's Online
We have 60 guests and 4 members online
|
|
|
|
Subscribe to this comment's feed
