Share Dilution

The cornerstone of the Sagicor tribunal decision confident “unfounded”

Cornerstone Financial Holdings Limited (CFHL), which is registered in Barbados, said it was informed by lawyers that a complaint recently filed against it by Sagicor Investments Jamaica Limited (SIJL) was “without merit” and was unlikely to be successful. ‘to achieve.

In a media statement Tuesday, CFHL said that, based on advice received from senior legal advisers in Barbados and Jamaica, Cornerstone and its directors should be able to successfully defend Sagicor’s claim.

the Trinity Express SIJL reported on Monday that SIJL has started legal proceedings in Barbados against CFHL over a disagreement over shares sold in rights issues and Sagicor’s alleged exclusion from share sales.

In its statement, CFHL said it observed reports in the media that a claim of US $ 4 million is required by Sagicor, which represents about 0.72% of Cornerstone’s equity of US $ 550 million. US dollars in September 2021.

According to Cornerstone, it is “noteworthy” that the sum cited in Sagicor’s claim represents 0.46% of Cornerstone’s total assets, which stood at US $ 859 million as of September 2021.

CFHL also said that for the fiscal year ended September 2021, Cornerstone generated US $ 72 million in net profits and paid more than US $ 13.6 million in dividends to its shareholders during the period.

CFHL, a private investment holding company incorporated in 2017 and headquartered in Barbados, said there are some important facts to highlight following the lawsuit reported by Sagicor.

According to CFHL, in June 2018, SIJL – a wholly owned subsidiary of Sagicor Group Jamaica Limited (SGJ) – was engaged by CFHL and Cornerstone United Holdings Jamaica Limited (together, Cornerstone) to act as arranger and underwriter regarding the 75.0% financing of CFHL majority acquisition of Barita Investments Limited via a takeover bid on the Jamaica Stock Exchange.

CFHL stated that for its services in this regard, SIJL was remunerated through a fee and separately obtained a 4.50 percent stake in CUHJL and CFHL for nominal consideration.

CFHL said that between June 2018 and September 2019, through a series of fundraising transactions with Cornerstone and its affiliates, the Sagicor Group would have earned more than US $ 3.5 million in fundraising fees.

CFHL further noted that the total fundraising fees, dividend income and value of the aforementioned stake, which SIJL recently put up for sale at US $ 12.5 million, total approximately US $ 17 million in value accruing to SIJL from the Cornerstone relationship in just three years.

According to CFHL, in June 2020, shortly after the start of the coronavirus pandemic, Cornerstone informed SIJL and its other shareholders of its intention to raise additional capital via a capital increase (issue of subscription rights 2020 ) in order to further capitalize its online subsidiaries. with the principles of prudence and risk management.

Details of the impending 2020 rights issue were reportedly presented by Cornerstone to senior management at SGJ and SIJL. According to CFHL, the consequences of SIJL’s decision not to participate in Cornerstone’s fundraising efforts have been fully explained, acknowledged and understood.

CFHL also said details of the 2020 capital increase were further detailed at an extraordinary general meeting of all Cornerstone shareholders who unanimously voted in favor of it. The 2020 subscription rights issue closed in July 2020 and was oversubscribed, CFHL said.

Before the closing of the 2020 capital increase, Cornerstone indicated that it had received a letter from SIJL indicating its intention to refrain from participating in the 2020 capital increase. Following SIJL’s decision not to participate in the 2020 capital increase, its stake increased from 4.50 percent to 3.47 percent, according to CFHL.

“In July 2021, a few days after sending notice of another capital increase to shareholders and approximately one year after the successful closing of the 2020 capital increase, Cornerstone received a letter from SIJL in which SIJL claimed to have suffered losses of USD 4.058 million resulting from the 2020 Capital Increase. The SIJL further asserted that these losses resulted from the dilution of its shareholding following the 2020 Capital Increase. This dilution was however the natural consequence of SIJL’s decision to withhold from participating in the 2020 Capital Increase. 2020 rights issue. Cornerstone responded to SIJL indicating its disagreement with the claim, ”CFHL wrote in its statement to media.

Cornerstone said SIJL followed its initial letter with a series of letters, which included alleged threats of legal action against Cornerstone and its directors in relation to its claims regarding the 2020 rights issue.

“In July 2021, Cornerstone returned to its shareholders via an EGM to offer to raise additional equity capital via another capital increase (2021 capital increase) and an additional private offering (Cornerstone APO). 2021 and the APO were approved by all Cornerstone shareholders The 2021 capital increase and the Cornerstone APO were oversubscribed and successfully closed in September 2021. As a result of SIJL’s non-participation in the capital increase in 2021, SIJL’s stake fell to 2.77% after the two fundraisers, ”CFHL wrote in its detailed statement.

CFHL said in late August 2021 that SIJL had offered Cornerstone to stay legal action if Cornerstone bought or guaranteed the sale of SIJL’s stake in Cornerstone.

According to the CFHL statement, while Cornerstone is in contact with one or more potential buyers, Cornerstone declined what it called “an unusual request to secure the sale of SIJL’s stake in Cornerstone.”

According to CFHL, the request was denied because Cornerstone has no interest or need to buy its own shares. CFHL ended his statement by saying he was not surprised that SIJL took legal action against Cornerstone and / or its directors.

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