All but one of Canada’s big five banks have agreed to lend a helping hand to restructure the commercial paper market.

Bank of Montreal, Royal Bank, CIBC, and Scotiabank have all agreed in principal that they will act as lenders in a $14 billion funding facility, according to the Committee charged with sorting out the solution. The facility would be a guard against future margin calls on the paper.

Toronto-Dominion Bank will not participate in the restructuring plan.

The Pan-Canadian Investors Committee, chaired by Toronto lawyer Purdy Crawford, told media during a conference call today that it expects the restructuring to be completed by the end of March.

Crawford would not comment on the specifics of each bank’s commitments.

As well, the committee said those involved have agreed to extend the market standstill agreement until Feb. 22, in order to help move things along.

Crawford dismissed the notion that continued extensions of the standstill agreement mean the process is falling behind. “This is completely false,” he said. “There should have been no expectation that we would have completed the restructuring by mid-December or by the end of January when the two prior standstills expired. Nor should there be any expectation that we will complete the restructuring by Feb. 22.” He said the extensions simply keep the players motivated and on-task.

“Most investors can expect to receive full par value of their investment over time by holding restructured paper to maturity,” said Crawford, during the conference call. “Most of the notes are expected to have very high investment grade ratings and they will benefit from reduced risk that external events affecting credit markets have had in the past.”

The restructuring plan deals with 20 of the trusts covered by last summer’s Montreal Accord, and approximately $33 billion
of the $35 billion of outstanding third-party ABCP in Canada

In order for the funding facility to be drawn on, a spread loss trigger would have to occur and the overall market value of the entire portfolio would have to deteriorate to a certain level, according to the committee.

The committee also announced today that New York-based Blackrock Inc. won the bid to be administrator and asset manager for the proposed restructuring vehicles. Crawford said Blackrock was chosen from several dozen proposals, including at least three from Canada, including Coventree.

“This is perhaps the most complex restructuring in Canadian history, we believe that the end of March remains an achievable target date,” said Crawford.

The restructuring has been approved in principle by the investors
committee, certain dealer bank asset providers and the sponsors of each of the trusts.