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CU System
Canadian CU Centrals merger hinges on 100 million buyout
TORONTO (4/16/08)--A proposed merger of Credit Union Central of Ontario and Credit Union Central of British Columbia hinges on whether Ontario's credit unions will agree to provide up to $100 million to buy frozen asset-backed commercial paper (ABCP) from the Ontario central. According to The Globe and Mail (April 15), Credit Union Central of Ontario approached its member credit unions about buying the frozen ABCP during its annual meeting the weekend of April 5. They will vote on the proposal on May 31. Art Chamberlain, spokesman for Credit Union Central of Ontario, said that if the proposal fails, the merger will be called off. If members approve the plan, the paper will move from the central's books to a trust fund for the credit unions, and the merger will take place. The association was stuck with $161 million of the short-term instruments after $35 billion of Canadian ABCP were frozen last August after buyers disappeared due to fears the investments were linked to U.S. subprime mortgages. The market turmoil forced the two centrals to postpone their merger, which had been expected to close last September. If the ABCP plan is approved, the merger will take place July 1. Roughly $32 billion of the frozen ABCP is expected to be restructure by that date, pending a vote by all ABCP investors.


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