Friday, September 07, 2007

Domtar reports ABCP exposure

Something to watch out for- many companies might have unexpected exposure to financial market turmoil through their pensions. Domtar Corporation announced:

"In light of the current disruption of credit markets, particularly for third party asset-backed commercial paper ("ABCP"), Domtar Corporation is providing the following update.

The Company and its subsidiaries, including Domtar Inc., have no holdings of ABCP.

Domtar Corporation's Canadian pension funds have approximately CDN $420 million (of which approximately $308 million is held by Domtar Inc.'s Canadian pension funds) invested in multiple ABCP conduits...

Losses in the pension fund investments, if any, would result in future increased contributions by the Company or its Canadian subsidiaries. Additional contributions to theses pension funds would be required to be paid over a 5-year period. Losses, if any, would also impact operating earnings over a longer period of time and immediately increase liabilities and reduce equity."

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