Royal Bank of Canada reaches agreement over Enron case
The Royal Bank of Canada (RBC) has reached a settlement agreement with Enron, the Enron creditors’ committee and Dutch firm Rabobank, resolving aspects of a share transaction known as ‘Cerberus’. The transaction also involved the use of total return swaps (TRSs) for hedging purposes. Under the terms of last month’s settlement, RBC will receive a payment valued at around $195 million plus interest.
RBC entered into a subsequent TRS agreement with Rabobank, under which the bankassumed the credit risk of the transaction and was required to pay RBC $517 millionplus interest in June 2002. Rabobank refused to honour the transaction, whichresulted in litigation
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