Stone Investment Group Announces Meeting Details in Connection With CBCA Plan of Arrangement and Additional Voting Support
Toronto ON – May 9, 2022. Stone Investment Group Limited (“SIG” or the “Corporation“) announced today that the Ontario Superior Court of Justice (Commercial List) (the “Court“) has issued an interim order (the “Interim Order“) authorizing, among other things, the holding of a meeting (the “Meeting“) of holders of the Corporation’s common shares (collectively, the “Shares“), to consider and vote upon a corporate plan of arrangement (the “Plan of Arrangement“) under the Canada Business Corporations Act (the “CBCA“) to implement certain transactions that were previously announced and agreed to pursuant to an arrangement agreement (the “Arrangement Agreement“) with Starlight Investments Capital LP (“Starlight Capital“).
As previously announced by the Corporation in its April 7, 2022 news release (the “Transaction Announcement“), Starlight Capital, through a wholly-owned subsidiary, will, through a series of transactions acquire SIG. As part of the transaction, Starlight Capital will: (i) acquire those $1,000 principal amount secured debentures issued by SIG (the “Debentures“) that were previously tendered and remain deposited pursuant to the offer (the “Stone Debenture Offer“) launched on November 29, 2021 by Stone-SIG Acquisition Limited (“SSAL“), a wholly-owned subsidiary of SIG (the “Deposited Debentures“); (ii) acquire all of the Shares; and (iii) redeem the remaining Debentures (the “Remaining Debentures“) not tendered to the Stone Debenture Offer, all pursuant to the terms of the Arrangement Agreement.
In particular, the transactions contemplated by the Arrangement Agreement are expected to be implemented in the following sequence:
1/ SSAL will use cash to be advanced by Starlight Capital in the amount of $800 per Debenture to complete the purchase of the Deposited Debentures;
2/ Starlight Capital will acquire all of the Shares in exchange for $0.01 per Share payable in cash pursuant to the Plan of Arrangement; and
3/ SIG will pay, pursuant to the terms and conditions of the trust indenture governing the Debentures (the “Indenture“), the principal amount owing in respect of the Remaining Debentures, plus accrued and unpaid interest thereon, including any additional interest, to complete the repayment of the Remaining Debentures.
Additional key terms of the transactions contemplated by the Arrangement Agreement are described in the Transaction Announcement.
Since the date of the Transaction Announcement, additional shareholders have entered into voting and support agreements (“Voting Agreements”) with Starlight Capital, which, together with other shareholders that previously entered into Voting Agreements, represent 65.9% of the outstanding Shares.
SIG’s Board of Directors unanimously recommends that shareholders vote IN FAVOUR of the Arrangement at the Meeting.
Following implementation of the Plan of Arrangement and completion of the related transactions in respect of the Debentures, the successor corporation to SIG will be a wholly-owned subsidiary of Starlight Capital and no Debentures will remain outstanding. 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 Indenture and will be completed in accordance with the steps set out in the Plan of Arrangement.
The Meeting and Voting
The Meeting in respect of the Plan of Arrangement is scheduled to be held virtually on June 15, 2022. Pursuant to the Interim Order, the Meeting is scheduled to begin at 3:00 p.m. (Toronto time).
The record date (the “Record Date“) for voting at the Meeting is 5:00 p.m. (Toronto time) on May 16, 2022.
Holders of the Shares as at the Record Date will be entitled to vote on the Plan of Arrangement at the Meeting based on one vote per Share held as at the Record Date.
To be approved at the Meeting, the Plan of Arrangement requires (i) the affirmative vote of at least 66⅔% of the votes cast or represented by proxy at the Meeting and (ii) the affirmative vote by a simple majority of the votes cast at the Meeting by all the shareholders present virtually or represented by proxy at the 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 CBCA (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 Meeting.
The deadline for the 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 applicable Meeting is 3:00 p.m. (Toronto time) on June 10, 2022.
The management information circular for the Meeting (the “Circular“) will contain, 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. The Corporation expects the mailing of the Circular to begin on or about May 18, 2022. The Circular, the forms of proxies, the voting information and election forms will also be available as follows:
Any questions or requests for further information regarding voting at the Meeting should be directed to the Corporation at firstname.lastname@example.org.
SIG has announced today that it intends to file early this week the requisite notice with the Canadian securities regulators pursuant to National Instrument 31-103 – Registration Requirements, Exemptions and Ongoing Registrant Obligations, which is required since the completion of the Plan of Arrangement will result in the indirect change of control of Stone Asset Management Limited (“SAM”), a wholly-owned subsidiary of SIG that is registered under securities legislation across Canada. In addition, notice of the change of control of SAM, in its capacity as the investment fund manager of the Stone mutual funds, has been given to investors in the SIG mutual funds pursuant to National Instrument 81-102 – Investment Funds.
Court Approval and Implementation
If the Plan of Arrangement and the Continuance are approved at the Meeting, the Corporation and Starlight Capital will attend a hearing before the Court to seek a final order approving the Plan of Arrangement, which has been scheduled for June 20, 2022 at 11 a.m. (Toronto time) (the “Final Order“).
As part of the Court approval of the Plan of Arrangement, the Corporation and Starlight Capital will seek, among other things, a permanent waiver of (i) any and all Debenture defaults resulting from the commencement of their CBCA proceedings (the “CBCA Proceedings“) and (ii) third party change of control provisions that may be triggered by the implementation of the Plan of Arrangement. The Corporation also expects to seek approval of the release of certain claims as provided for in Plan of Arrangement.
Completion of the transaction contemplated by the Arrangement Agreement are subject to, among other things, approval of the Plan of Arrangement by the shareholders at the Meeting to be held on June 15, 2022 as further described above, such other approvals as may be required by the Court, other applicable regulatory approvals, the issuance of the Final Order approving of the Plan of Arrangement by the Court, and the satisfaction or waiver of applicable conditions precedent pursuant to the Arrangement Agreement. Subject to the receipt of all requisite approvals and the satisfaction or waiver of the other conditions to completion of the Plan of Arrangement, the Corporation is working towards completing the Plan of Arrangement by the end of June 2022.
Additional information in connection with the implementation of the Plan of Arrangement and the CBCA Proceedings will be made publicly available by the Corporation and certain additional documents relating to the Plan of Arrangement and/or and the CBCA Proceedings will be hosted on the Corporation’s website (www.stoneco.com).
Bennett Jones LLP is acting as legal advisor to the Corporation and Borden Ladner Gervais LLP is acting as legal advisor to Starlight Capital.
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 the 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 holding and timing of, and matters to be considered at the Meeting as well as with respect to voting at such Meeting; the deadlines for submitting proxies, voting instructions and elections; the scheduling of the Meeting; the matters to be considered at and voted on the Meeting; the Corporation’s continuance under the CBCA; the relief to be sought in the CBCA Proceedings in respect of the Plan of Arrangement; the completion of the Plan of Arrangement, including with respect to obtaining any necessary approvals and satisfying any conditions and the expected timing thereof; the public posting of materials and information related to the Plan of Arrangement; and the effect of the Plan of Arrangement.
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 and the Transaction Announcement; 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 Meeting; the ability of the Corporation to operate in the ordinary course during the CBCA Proceedings, including with respect to satisfying obligations to service providers, suppliers, contractors and employees; 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.