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Cerberus Capital Management, L.P. invests in CIBC's U.S. residential real estate portfolio

Date Closed

October 16, 2008

Lead Office

Toronto

Value

1.05 Billion USD

On October 16, 2008, following the completion of a competitive bidding process, a fund arranged by Cerberus Capital Management, L.P.,  agreed to invest US$1.050 billion in cash in CIBC's U.S. residential real estate portfolio. The fair value of the reference portfolio as of the effective date of the transaction, June 30, 2008, was US$1.186 billion. As of the end of CIBC's fiscal third quarter, July 31, 2008, the value was US$1.075 billion. The fund has agreed to acquire US$1.050 billion of amortizing senior notes, which will have a capped return, payable in cash. The recourse on the notes will be limited to the assets in the reference portfolio. In addition, CIBC will retain 100% of the potential upside on the portfolio following repayment of the notes. The reference portfolio consists of U.S. residential mortgage-backed securities (RMBS) and collateralized debt obligations (CDOs) of RMBS. These securities are part of CIBC's legacy structured credit runoff portfolio.

McCarthy Tétrault LLP advised Cerberus with a team that included Jerald Wortsman, Bill McCullough, Richard Higa, and Douglas Cannon.

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