Investors vote in favour of restructuring offer

A 96-per-cent vote by investors in favour of a restructuring plan for the troubled asset-backed commercial paper market is good news for the territory.

A 96-per-cent vote by investors in favour of a restructuring plan for the troubled asset-backed commercial paper market is good news for the territory.

That’s the belief of Department of Finance officials, who admit there’s still more to wait for before the plan can go ahead.

“It’s a major milestone,“ Clarke LaPrairie, the department’s deputy minister, said in an interview this morning.

The Yukon has $36.5 million tied up in the market, which has been held since last year when the ABCP market started experiencing trouble. Across the country, there’s about $33 billion tied up.

Investors voted 96-per-cent in favour of the restructuring deal Friday. It will see the investments rolled over into long-term investments that would all mature by 2016.

A judge still has to approve the plan, with a tentative date for that set for this coming Friday.

“It still has that final hurdle,“ LaPrairie said.

There’s also a group of investors who will present arguments against the deal because it takes away the ability of investors to sue the bank.

Still, last Friday’s vote indicates there’s progress, LaPrairie said.

In the meantime, the department is also continuing to work with Auditor General Sheila Fraser’s office to determine whether holding the restructured notes would breach the territory’s Financial Administration Act.

A report by the Auditor General’ office found the investments had breached the act. The government has since stopped making such investments.

LaPrairie noted this could be a case where the best course of action would be to go for the restructuring, but that the department will continue dealing with the Auditor General’s office on it.

While there’s enough of a surplus right now to address the territory’s needs, that could easily change in the coming years as large capital projects continue, Liberal Leader Arthur Mitchell said this morning.

“At some point, we’re going to need that money,“ he said.

He pointed to the planned construction of a new Whitehorse Correctional Centre, work on F.H. Collins Secondary School and major road reconstruction plans.

At some point, a decision may have to be made pursuing such projects because the money won’t be available for another eight years, he said.

“It will be somebody else’s problem,“ Mitchell commented.

It likely won’t be the current Yukon Party government that has to deal with the repercussions of the investments, he suggested. The current government’s mandate will expire in 2011

“There’s still a lot of unanswered questions,“ Mitchell said.

Essentially, the Yukon has given up its right to sue and is trusting the same people who said it would get its money back in 30 days to give it back in eight years, the Liberal leader argued.

It’s basically a Peter Pan approach, with the Yukon government believing if it closes its eyes, claps its hands and wishes hard, then maybe it will get its money back, he said.

Like Mitchell, NDP Leader Todd Hardy is concerned about the long-term impacts of the money being tied up, especially with the potential of the downturn in the economy.

The economy across the country is slowing down, and there’s nothing in place to serve as a cushion to get the territory through harder financial times that may be ahead, he argued.

“Where’s the long-term planning?“ he asked.

The overall financial situation through the country could impact federal transfer payments coming into the territory, he pointed out.

Hardy again issued his call on the government to look at where it is investing its money and that there be a stand-alone Finance minister rather than having

Dennis Fentie serve as both premier and Finance minister.