TECSYS Inc. Announces the Status of its Cash Holdings and Short-Term Investments
MONTREAL (September 04, 2007) – TECSYS Inc. (TSX: TCS), an industry-leading supply chain management software company provides the following update on the status of its cash holdings and short-term investments in light of the current disruption in the credit markets relating to asset-backed commercial paper (ABCP). All dollar amounts are expressed in Canadian currency. TECSYS had a total available cash position of approximately $8.1 million as of August 31, 2007, including $5.1 million invested in six different non-bank or third-party ABCP trusts, of which $1.4 million is managed by Coventree Capital Group Inc. Despite liquidity concerns related to the ABCP products in which TECSYS has invested, TECSYS has a balance of $3.0 million which it believes is sufficient cash to meet its financial and operational obligations. TECSYS has received an offer of a credit facility of $4.8 million from the National Bank of Canada which is currently being negotiated.
The remaining $3.0 million of available cash is either held as cash or invested in highly rated liquid instruments (mainly cash, term deposits and banker’s acceptances) and has no exposure whatsoever to the current ABCP market disruption.
All of TECSYS’ ABCP investments are in trusts rated R1-high by Dominion Bond Rating Service (DBRS) — DBRS’ highest credit rating. The ABCP held by TECSYS are securities that met the criteria of TECSYS’ investment policy and were purchased on the basis of professional advice from National Bank of Canada. Maturity dates range from August 13, 2007, to September 6, 2007. Of the $5.1 million invested in ABCP by TECSYS, $3.0 million has matured to date and has not been repaid.
DBRS has placed several ABCP issuers “Under review with developing implications”, following the announcement in Stockwatch on August 16, 2007, by a consortium representing banks and major investors that they had agreed in principle to a long-term proposal and an interim agreement regarding third party asset-backed commercial paper. According to the announcement the effect of the agreement in principle would be, among other things, to convert ABCP into term floating-rate notes maturing no earlier than the scheduled termination dates of the underlying assets.
Source: Tecsys
