IQW.PR.C / IQW.PR.D : Creditor Protection

Quebecor World has announced:

that the Board of Directors of the Company has authorized it to file for creditor protection under the Companies’ Creditors Arrangement Act (CCAA) in Canada. A number of Quebecor World’s U.S. subsidiaries are also covered by the CCAA filing in Canada as well as in the United States under Chapter 11 of the United States Bankruptcy Code.

The deadline of 9:00 a.m. January 20, 2008, for satisfaction of the conditions precedent to the previously announced CDN$400 million rescue financing agreement with Quebecor Inc. and Tricap Partners Ltd. having passed without such conditions being satisfied results in the agreement relating to the rescue financing being terminated and without effect.

The prior post in this saga was posted last Friday

Update: DBRS has downgraded the long term debt ratings of Quebecor World to D and commented on the effect of this move on ABCP:

A number of series of Canadian asset-backed securities rated by DBRS, which may be funded by asset-backed commercial paper (ABCP) or floating-rate notes, are backed by collateralized debt obligation (CDO) transactions that reference Quebecor World debt obligations. There are 14 such CDO transactions in total, which are funded by nine series of ABCP. Of these nine series, eight were issued by trusts that are Affected Trusts under the Montréal Accord restructuring process. (In addition to the 14 transactions discussed above, DBRS also rates one publicly rated CDO with exposure to Quebecor World that is not funded by Canadian ABCP.)

In analyzing the ratings stability of CDO transactions from a credit perspective, DBRS utilizes the stability cushion concept. A stability cushion represents the buffer of subordination that is available to a CDO tranche in excess of the minimum subordination required to achieve a particular rating for that tranche. Put another way, a stability cushion is equal to a transaction’s attachment point minus the required subordination level for a given rating.

To demonstrate the level of ratings stability of the 14 transactions that reference Quebecor World, DBRS applied a stress scenario that assumed default by Quebecor World with zero recovery. (Note that this is a conservative worst-case scenario applied for modeling purposes. DBRS is not expressing a view on potential recovery.) The results indicated that the transactions are able to withstand this scenario while maintaining their current rating. While the required subordination level has increased, each transaction’s stability cushion is sufficient to withstand the stress scenario applied.

5 Responses to “IQW.PR.C / IQW.PR.D : Creditor Protection”

  1. […] Unlike Quebecor, the monoline ACA Capital Holdings (of CIBC and Merrill Lynch fame) was given a little breathing room by its creditors, presumably on the grounds that it doesn’t make much difference. Three comments from the story are of interest: Most of those guarantees are in the form of derivatives. Unlike insurance, these contracts are required to be valued at market rates. … “The monolines are dead, their business model is dead,’’ said David Roche, head of investment consultancy Independent Strategy in London. “The government is going to have to recapitalize this industry or there will be communities in the U.S. where they can’t even flush their toilets’’ because they can’t afford the services. … New York State Insurance Superintendent Eric Dinallo is examining whether to limit the types of debt that can be guaranteed by bond insurers, department spokesman David Neustadt said last week. […]

  2. […] PrefBlog Canadian Preferred Shares – Data and Discussion « IQW.PR.C / IQW.PR.D : Creditor Protection HIMIPref™ Preferred Indices: August 2005 » […]

  3. […] Quebecor World is currently in creditor protection and is on review for possible delisting. The conversion of over half the IQW.PR.C has been discussed previously. […]

  4. […] There are currently 3,024,337 IQW.PR.C outstanding, according to the TSX – thus, just over a sixth of the shares are being converted. The notice of conversion was reported on PrefBlog. The preferred shares are in default. […]

  5. […] on the preferreds were suspended in November 2007. They entered bankruptcy protection in January after defaulting on an interest payment to senior bonds; an auction held on Credit Default Swaps […]

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