Canada Line gets extra loan
The province and TransLink will lend Canada Line Rapid Transit Inc. extra bridging money because $56.5 million it invested in the asset-backed commercial paper (ABCP) market remains frozen.
TransLink's board on July 31 amended its loan agreement with the Canada Line subsidiary that oversees the construction and launch of the new rapid transit line from Vancouver to Richmond and the airport.
Officials weren't able to say how much additional borrowing room they now have.
ABCP investments were backed by U.S. residential mortgages but suddenly stopped trading last summer when the U.S. real estate market began to melt down and heavy mortgage defaults began.
Individual Canadians, corporations and agencies have $33 billion tied up in ABCP that so far can't be redeemed.
A restructuring plan that would allow trading of ABCP to resume – although at sharply reduced valuations – has been in the works for months but has not yet cleared all legal hurdles.
Canada Line spokesman Alan Devers expects much of the money will be recovered – and the loan repaid – once ABCP trading does restart.
"We still have the asset-backed securities and when that process finally concludes we'll go to market and we'll recover what we're going to recover," he said.
Canada Line Rapid Transit has estimated the fair market value of its ABCP holdings at $49.3 million – suggesting a loss of $7.2 million or 12.7 per cent is likely.
ICBC also holds $45 million in frozen ABCP, while the Fraser Health Authority has $13 million.
Devers said the $2-billion Canada Line remains on budget and on track to open by November of 2009.
"We're still slightly ahead of schedule," he said.
Traffic chaos along the Cambie Street corridor in Vancouver, where the cut-and-cover construction has proceeded for the past three years, is expected to end this fall.
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