Stone Investment Group Announces Mailing of Circular, Updates to Shareholder Meeting, Additional Voting Support and Updates to Debentureholder Transaction
Toronto ON – May 19, 2022. Stone Investment Group Limited (“SIG” or the “Corporation“) announced today that an information circular (the “Information Circular“) and other materials (the “Shareholder Materials“) have been mailed to the holders of the Corporation’s common shares (collectively, the “Shareholders” and “Shares“, respectively) in connection with the previously announced meeting of Shareholders scheduled to be held virtually at 3:00 p.m. (Toronto time) on June 15, 2022 (the “Shareholders Meeting“) to approve certain transactions by way of a plan of arrangement (the “Plan of Arrangement“) that were previously announced and agreed to pursuant to an arrangement agreement dated April 7, 2022 (the “Arrangement Agreement“) between the Corporation, Stone-SIG Acquisition Limited (“SSAL“), 13613429 Canada Inc., Starlight Investments Capital LP (“Starlight Capital“) and 13909841 Canada Inc.
As previously announced by the Corporation in its April 7, 2022 news release, Starlight Capital will, through a wholly owned subsidiary and through a series of transactions, acquire SIG. The series of transactions include the following, which will occur in the order set out below, all as set out in the Arrangement Agreement and the Plan of Arrangement, a copy of which is included in the Meeting Materials: (i) Starlight Capital, through a subsidiary, will provide financing to allow SSAL to acquire the Corporation’s $1,000 principal amount secured debentures (the “Debentures“) tendered pursuant to the offer (the “Stone Debenture Offer“) launched on November 29, 2021 by SSAL, a wholly-owned subsidiary of SIG (the “Deposited Debentures“); (ii) Starlight Capital, through a subsidiary, will acquire all of the Shares; and (iii) the acquisition of all of the Shares in step (ii) will result in a change of control of SIG that will trigger the redemption by the Corporation of the remaining Debentures (the “Remaining Debentures“) not tendered to the Stone Debenture Offer, all pursuant to the terms of the Arrangement Agreement and the Plan of Arrangement (together, the “Transaction“).
Recommendation of the Board
The Transaction was approved by the board of directors of the Corporation and the Corporation’s board of directors recommends that Shareholders vote in favour of the Transaction. WD Capital Markets Inc. (“WD“) provided the board of directors with a fairness opinion, dated April 7, 2022, to the effect that, as of the date of such opinion, (i) the consideration to be received by Shareholders pursuant to the Arrangement is fair, from a financial point of view, to the Shareholders, and (ii) the holders of the Debentures and the holders of Shares, respectively, are better off under the Plan of Arrangement than if the Corporation were liquidated as, in each case, the estimated aggregate value of the consideration made available to them pursuant to the Plan of Arrangement would, in WD’s opinion, exceed the estimated value they would receive in a liquidation, based upon and subject to the respective assumptions, limitations, qualifications and other matters set forth in the opinion.
The Shareholder Meeting
The Shareholder Meeting is scheduled to be held virtually on June 15, 2022 at 3:00 p.m. (Toronto time). The record date (the “Record Date“) for voting at the Shareholder Meeting is 5:00 p.m. (Toronto time) on May 16, 2022.
Shareholders as at the Record Date will be entitled to vote on the Plan of Arrangement at the Shareholder Meeting based on one vote per Share held as at the Record Date. The Information Circular provides important and detailed instructions about how to participate at the virtual Shareholder Meeting.
To be approved at the Shareholder Meeting, the Plan of Arrangement requires (i) the affirmative vote of at least 66⅔% of the votes cast or represented by proxy at the Shareholder Meeting and (ii) the affirmative vote by a simple majority of the votes cast at the Shareholder Meeting by all the Shareholders present virtually or represented by proxy at the Shareholder Meeting excluding Mr. Richard Stone in accordance with Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions.
In connection with the Plan of Arrangement, it is anticipated that the Corporation will continue from the Business Corporations Act (Ontario) to the Canada Business Corporations Act (the “Continuance”) prior to the Plan of Arrangement being effective. The Continuance requires the affirmative vote of at least 66⅔% of the votes cast at the Shareholder Meeting.
The deadline for Shareholders to submit their proxies or voting instructions in order to vote on the Plan of Arrangement and other items to be considered at the Meeting is 3:00 p.m. (Toronto time) on June 10, 2022.
Since the SIG press release issued on May 9, 2022, additional Shareholders have entered into voting and support agreements (“Voting Agreements“) with Starlight Capital. In total, Shareholders holding approximately 66.4% of the outstanding Shares have now entered into Voting Agreements.
Any questions or requests for further information regarding voting at the Shareholder Meeting should be directed to the Corporation at firstname.lastname@example.org.
Management Information Circular
The Information Circular contains, among other things, information regarding procedures for voting on the Plan of Arrangement, as well as other background and material information regarding the Plan of Arrangement and the Arrangement Agreement. In addition to being mailed to Shareholders, the Shareholder Materials will be available as follows:
On SIG’s website at www.stoneco.com; or
Under SIG’s SEDAR profile at www.sedar.com.
The Shareholder Materials will also be mailed to Debentureholders for informational purposes only and will be posted on the Corporation’s website. There is no action required of the Debentureholders.
Any questions or requests for further information regarding voting at the Shareholder Meeting should be directed to the Corporation at email@example.com.
Voting Your Shares
Any registered Shareholder who would like to virtually attend the Shareholder Meeting can join electronically through Microsoft Teams. Registered Shareholders must advise the Corporation of their intention to attend the Shareholder Meeting not later than noon (Toronto Time) on June 10, 2022 by sending an email that includes the registered Shareholder’s full name and contact information to firstname.lastname@example.org.
Shareholders who hold Shares through a broker or other nominee who holds securities (an “Intermediary“), should follow the instructions provided by their Intermediary to vote their Shares.
Stone Debenture Offer Update
The Corporation also announced today the following updates in respect of the Stone Debenture Offer:
1/ Extended Expiry Time: SIG is extending the offer period for the Stone Debenture Offer to 5 pm (Toronto time) on June 30, 2022 (the “Expiry Time“) in order to accommodate the anticipated closing dates of the Transaction. The Stone Debenture Offer remains open for acceptance until the Expiry Time.
2/ Intention to Waive Condition: The Stone Debenture Offer is subject to a condition that 7,293 Debentures be deposited to the offer (the “Debenture Threshold Condition“). As of today, a total of 6,464 Debentures have been deposited to the Stone Debenture Offer. If the Debenture Threshold Condition is not satisfied, it is expected that SSAL will waive the Debenture Threshold Condition and will seek consent from Starlight Capital to waive the corresponding condition to the advance of funds to complete the acquisition of the Deposited Debentures.
Details of the Stone Debenture Offer are set out in the offer document dated November 29, 2021 (the “Offer Document“) and the letter of transmittal (the “Letter of Transmittal“) circulated in connection with SSAL’s original cash offer, as modified by the press releases issued by the Corporation on December 15, December 17, December 21, December 22, December 27 and January 28. Aside from the change in Expiry Time, all terms and conditions regarding the Stone Debenture Offer remain the same. The Offer Document, the accompanying Letter of Transmittal and the press releases are available under the Corporation’s profile on SEDAR at www.sedar.com.
The key dates for the transactions described above are, or are expected to be, the following:
1/ June 15, 2022: The Shareholders Meeting will be held at 3:00 p.m. (Toronto time) on June 15, 2022.
2/ June 20, 2022: The Ontario Superior Court of Justice (Commercial List) will hold the hearing in respect of a final order approving the Plan of Arrangement (the “Final Order“) at 11 a.m. on June 20, 2022.
3/ On or about June 27, 2022: If the Final Order is obtained and all other conditions to closing the Transaction are satisfied, the steps as set out in the Plan of Arrangement will occur in the order and times as set out in the Plan of Arrangement. As noted above, such steps will include the following:
a. It is anticipated that the Debenture Threshold Condition will be waived and the purchase of the Deposited Debentures will be completed. In accordance with the terms of the Stone Debenture Offer, the holders of Deposited Debentures will be paid $800 per Debenture (with no additional amount in respect of accrued and unpaid interest and Additional Interest (as that term is defined in the trust indenture governing the Debentures (as amended, the “Trust Indenture“)). Following the completion of the acquisition of the Deposited Debentures, such Debentures will be settled. Immediately after the cancellation of the purchased Deposited Debentures, all of the Shares will be acquired indirectly by Starlight Capital pursuant to the Plan of Arrangement.
b. The Plan of Arrangement will also, among other things, result in a series of amalgamations which will result in SIG being succeeded by a successor corporation.
c. The acquisition of all of the Shares will result in a change of control of SIG as defined in the Trust Indenture which will trigger a requirement for SIG (or the successor corporation) to redeem the Remaining Debentures as required by the terms of the Trust Indenture. In accordance with the terms of the Trust Indenture, the holders of Remaining Debentures will be paid $1,000 principal amount per Debenture, plus accrued and unpaid interest, including Additional Interest, per Remaining Debenture. As set out in the Arrangement Agreement and the Plan of Arrangement, such redemption will occur immediately after the acquisition of the Shares.
For greater certainty, only the Shares will be arranged under the Plan of Arrangement. The Debentures and the rights of the holders of Debentures will not be arranged, but will be repurchased or acquired pursuant to the Stone Debenture Offer and the Trust Indenture and will be completed in accordance with the steps set out in the Plan of Arrangement. None of the steps set out above will occur unless all of such steps occur, and will be deemed to have occurred and be effective in the order and in the time set out in the Plan of Arrangement.
The acquisition of the Shares is subject to regulatory approval. Notice has been sent to the applicable Canadian securities regulatory authorities.
About Stone Investment Group Limited
The Corporation is an independent wealth management Corporation. The Corporation, through its wholly owned subsidiary, Stone Asset Management Limited, structures and manages high quality investment products for Canadian investors.
For more information:
Stone Investment Group Limited
CEO & CIO
416 867 2525
Disclaimer for Forward-Looking Information
Certain information contained in this press release may contain forward-looking statements within the meaning of applicable securities laws. The use of any of the words “continue”, “plan”, “propose”, “would”, “will”, “believe”, “expect”, “position”, “anticipate”, “improve”, “enhance” and similar expressions are intended to identify forward-looking statements. More particularly and without limitation, this document contains forward-looking statements concerning: key terms of the Plan of Arrangement and the effect of its implementation on Shareholders and the Corporation; stakeholder support for the Plan of Arrangement; the acquisition of the Corporation by Starlight Capital; the expected process for and timing of implementing the Plan of Arrangement; the scheduling of the Shareholders Meeting; the completion of the Plan of Arrangement, including with respect to obtaining any necessary approvals and satisfying any conditions and the expected timing thereof.
Forward-looking statements necessarily involve risks, including, without limitation, risks associated with the ability of the Corporation to implement the Plan of Arrangement on the terms described in this press release; the ability of the Corporation to receive all necessary regulatory, court and stakeholder approvals in order to complete the Plan of Arrangement; the matters to be considered and voted on at the Shareholders Meeting; the ability of the Corporation to continue as a going concern; the ability of the Corporation to continue to realize its assets and discharge its liabilities and commitments; the Corporation’s future liquidity position, and access to capital, to fund ongoing operations and obligations (including debt obligations); the ability of the Corporation to stabilize its business and financial condition; the ability of the Corporation to implement and successfully achieve its business priorities; the ability of the Corporation to comply with its contractual obligations, including, without limitation, its obligations under debt arrangements; the general regulatory environment in which the Corporation operates; the tax treatment of the Corporation and the materiality of any legal and regulatory proceedings; the general economic, financial, market and political conditions impacting the industry and markets in which the Corporation operates; the ability of the Corporation to sustain or increase profitability, fund its operations with existing capital and/or raise additional capital to fund its operations; the ability of the Corporation to generate sufficient cash flow from operations; the impact of competition; the ability of the Corporation to obtain and retain qualified staff, equipment and services in a timely and efficient manner (particularly in light of the Corporation’s efforts to restructure its debt obligations); and the ability of the Corporation to retain members of the senior management team, including but not limited to, the officers of the Corporation.
Events or circumstances may cause actual results to differ materially from those predicted, as a result of the risk factors set out and other known and unknown risks, uncertainties, and other factors, many of which are beyond the control of SIG. In addition, forward-looking statements or information are based on a number of factors and assumptions which have been used to develop such statements and information but which may prove to be incorrect and which have been used to develop such statements and information in order to provide stakeholders with a more complete perspective on SIG’s future operations. Such information may prove to be incorrect and readers are cautioned that the information may not be appropriate for other purposes. Although the Corporation believes that the expectations reflected in such forward-looking statements or information are reasonable, undue reliance should not be placed on forward-looking statements because the Corporation can give no assurance that such expectations will prove to be correct. In addition to other factors and assumptions which may be identified herein, assumptions have been made regarding, among other things: the impact of competition; the general stability of the economic and political environment in which SIG operates and the timely receipt of any required regulatory approvals. Readers are cautioned that the foregoing list is not exhaustive of all factors and assumptions which have been used. As a consequence, actual results may differ materially from those anticipated in the forward-looking statements. Furthermore, the forward-looking statements contained herein are made as at the date hereof and SIG does not undertake any obligation to update publicly or to revise any of the included forward looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.