ISDA has prepared this brief summary of frequently asked questions to assist in your consideration of the 2008 Tembec CDS Protocol (the “Tembec Protocol”).
THIS FREQUENTLY ASKED QUESTIONS DOES NOT PURPORT TO BE AND SHOULD NOT BE CONSIDERED A GUIDE TO OR AN EXPLANATION OF ALL RELEVANT ISSUES OR CONSIDERATIONS IN CONNECTION WITH THE TEMBEC PROTOCOL. PARTIES SHOULD CONSULT WITH THEIR LEGAL ADVISERS AND ANY OTHER ADVISER THEY DEEM APPROPRIATE PRIOR TO USING OR ADHERING TO THE TEMBEC PROTOCOL. ISDA ASSUMES NO RESPONSIBILITY FOR ANY USE TO WHICH ANY OF ITS DOCUMENTATION OR OTHER DOCUMENTATION MAY BE PUT.
This Frequently Asked Questions webpage is divided into three sections: (i) questions relating to the submission of Adherence Letters; (ii) questions relating to the election of an entity not to participate in the Tembec Protocol; and (iii) questions relating to the substance of the Tembec Protocol itself.
Adherence Letter Submission Process
How do I send in my Adherence Letter?
The Adherence Letter(s) should be on your institution’s letterhead. Nothing in the form Adherence Letter available on ISDA’s website may be changed with the exception of completing the details of your institutional name, date and signature block.
You are not required to send your original Adherence Letter(s) by mail to ISDA.
What is a conformed copy?
You must also submit an executed, or signed, copy of the Adherence Letter in addition to the conformed copy of the Adherence Letter. ISDA keeps the executed copy of the Adherence Letter for its files and does not share the executed copy with anyone else.
Who is an authorized signatory?
What if I am an investment or asset manager – how do I complete the signature block?
As an alternative, an investment or asset manager may list the specific funds that are adhering to the Protocol, by indicating in the signature block: “Investment/Asset Manager, acting on behalf of the funds and accounts listed below”. Click here for example. Please note that in this case the names of those funds will be publicly disclosed on the ISDA website.
Whichever method is used, in order for Physical Settlement Requests to be calculated by Participating Bidders, each such investment/asset manager is required to provide a list of all funds and accounts that it acts on behalf of to each Participating Bidder that has (or whose affiliate has) entered into a Master Agreement with any of those funds or accounts. As provided in paragraph (1) of the Auction Methodology set out in Exhibit 3 of the Tembec Protocol, on the Business Day prior to the Auction Date, the Administrators (Markit and Creditex) will publish a list of the Participating Bidders on their respective websites. In addition, contact details will be available for the Participating Bidders through their Adherence Letters on the ISDA website.
Can I change the text of the Adherence Letter?
Do I need to reference a DTCC number on the Adherence letter? What are the implications if I do not?
Does it cost any money to adhere to the Tembec Protocol?
Entities Electing Not to Adhere to the Tembec Protocol
If your institution or fund elects not to participate in the Tembec Protocol, then you must bilaterally settle each of your trade(s) with each of your counterparties as such trade(s) relate to Tembec Industries Inc. You will not be able to take advantage of the auction mechanic and should contact your counterparty or counterparties immediately if you do not plan to participate in the Tembec Protocol.
Scope of Transaction Coverage Relating to the Tembec Protocol
Does adhering to the Tembec Protocol affect other credit derivative transactions?
What credit derivative transactions are not affected by adhering to the Tembec Protocol?
When is the auction?
Cash Settlement Date and Accruals
The Fixed Rate on the Tembec Portion shall accrue to but exclude September 22, 2008 for purposes of the payment due on that date. However, a rebate of the Fixed Rate accrual on the Tembec Portion for the period from and including September 9, 2008, to but excluding September 22, 2008, will be added to the Cash Settlement Amount to be paid to Buyer on the Cash Settlement Date.