I agree with AC*SE on this point. The Royal Bank is not a noteholder of this type. While it does have secured standing having loaned money to Cdn as part of the carrier's day-to-day operations through overdrafts and other vehicles, it would not have bought bonds or other forms of securities, and thus is not included in this payout, which represents less than 10% of Cdn's overall obligations.
What happens now with these instruments is similar to what will occur with the common and preferred shares. They are basically "written down" on the books. In this case, they are paid off at the agreed upon settlement rates. Any stock which was not been tendered at year end, is now worthless and will be delisted with no compensation other than the technicalities of some classes of shares being subsumed by a special share that will go to the AC subsidiary company.
The balance of contracts and debt have been renegotiated and will remain on the books of the new AC subsidiary. The Royal, it appears, would remain the lead banker of this subsidiary until such time as the "new Cdn" decides to change bankers, at which time the Royal would be paid off, and the new banker moves in. As I noted in an earlier post, it is not uncommon for more than one Canadian chartered bank to be involved in a syndicated loan, so it is not unusual that CIBC has decided to not replace the Royal at this stage.
CIBC may well have lent the money to pay off these secured noteholders, but this just comes to US$175 million, and not the full C$2 billion+ covering long term leases and other debt. As I noted before, the money from STAR partners and CIBC went to buy-back the 40% shares of AC and most of the shares of Cdn. (According to the 1999 Annual Report).
There will be a more orderly phase out of the Royal Visa co-branded card at some time in the future, likely tied into the ultimate disappearance of Cdn itself into AC. That may come in the 4- to 5-months timeframe Cdn pres Brotto has referred to in press reports, but how long Cdn will operate as a separate carrier also depends on how soon AC's balance sheet can absorb the balance of Cdn's debt: i.e. operating loans, long term leases, etc.