Commercial Paper Crunch Hits Sun-Times Media Group

By: E&P Staff Chicago Sun-Times parent Sun-Times Media Group (STMG) said late Friday that its operations will not be affected by a global credit crunch -- despite the fact that it has been unable to redeem some commercial paper investments in Canada.

In a statement, STMG said as of August 16 its Canadian subsidiary had US$121 million invested in asset-backed commercial paper issued by several trusts in Canada. The market for commercial paper, bonds sold to borrow for short periods of time, has been hit by a worldwide liquidity crunch.

STMG said that $50 million of those investments matured Aug. 21 -- but that just $25 million was redeemed by Ironstone Trust, which is sponsored by the National Bank of Canada. The remaining $25 million remain outstanding, STMG said.

Another, $23 million matured on Aug. 24, and was not redeemed, the company said. Of that, $20 million was invested in Planet Trust, sponsored by Coventree Capital, and $3 million in Ironstone Trust. These investments were not redeemed and remain outstanding.

STMG also warned that another $47 million matures between Aug. 27 and Sept. 10. Of that $36 million is in trusts sponsored by its investment adviser CIBC World Markets. CIBC last Monday announced it would provide liquidity to the trusts it sponsors, STMG said.

The remaining $11 million invested in Lafayette Trust, which is sponsored by Swiss Re and managed by Coventree Capital. "Liquidity has been available to redeem Lafayette Trust investments that have matured since the start of the Canadian asset-backed commercial paper market disruption, but the company has received no assurance that its Lafayette Trust investments will be redeemed at maturity," STMG said.

STMG said as of June 30, it held $212.1 million in cash and cash equivalents, including the unredeemed commercial paper.

"Sun-Times Media Group's operations have
not been affected by these events and the company advises that it has sufficient cash available to maintain all of its operations while these matters are being resolved," the company said.