Stone Investment Group Provides Update to Closing of Transaction with Starlight Capital
Toronto ON – June 23, 2022. On June 22, 2022, Starlight Capital Investments LP (“Starlight Capital“) issued a press release announcing that as of yesterday’s date, Stone Investment Group Limited (“SIG” or the “Corporation“) had not yet satisfied the closing condition (the “AUM Condition“) to maintain a minimum of $630 million of assets under management (“AUM“) in its public mutual funds (the “Stone Funds“) and managed accounts as required pursuant to the arrangement agreement dated April 7, 2022 between SIG, Starlight Capital, Stone-SIG Acquisition Limited, 13613429 Canada Inc., and 13909841 Canada Inc., as amended May 6, 2022 (the “Arrangement Agreement“). Starlight Capital went on to state that if the AUM Condition is not satisfied prior to June 30, 2022, it does not currently intend to complete the transactions pursuant to the Arrangement Agreement unless at least 10,500 of Stone’s outstanding 9.0% senior unsecured debentures (the “Debentures“) are irrevocably deposited by 5:00 pm on June 24, 2022 to the offer launched on November 29, 2021, as amended, by Stone-SIG Acquisition Limited for $800 per Debenture (as amended on December 15, 21, 22 and 27, 2021, and January 28, March 31 and May 19, 2022, the “Stone Offer“).
As the Corporation has previously announced, the Stone Offer remains open for acceptance until June 30, 2022.
The Corporation wishes to clarify that the decline in AUM is a function of the sharp decline in global capital markets over recent weeks and is not a reflection of the relative performance of the Stone Funds and managed accounts. Stone Asset Management Limited, portfolio manager of the Stone Funds and managed accounts, together with all of the subadvisors, remain confident that the investment portfolios are being managed appropriately in the circumstances.
Richard Stone, President and CEO of the Corporation, said: “Everyone knows the global capital markets are in a period of precipitous decline. When we signed the Arrangement Agreement on April 7, we were comfortably over the AUM threshold. It is unfortunate that the collapse of the global markets began just weeks before our scheduled closing date. Given the timeline for approval from shareholders, the court and the regulators, there was nothing we could do to accelerate the transactions. Despite this challenge, the firm, its managers and subadvisors remain steadfastly dedicated to the best interests of the investors in the Stone Funds and our managed account clients. While the circumstances are certainly less than ideal at the moment, we remain optimistic that the transaction with Starlight Capital will be completed and we continue to work toward merging our operations. We are doing everything we can to get this done.”
To demonstrate his own commitment to completing the transaction, Mr. Stone has executed and delivered a letter of transmittal to deposit under the Stone Offer all 728 Debentures that he beneficially owns, subject to acceptance in conjunction with the closing of the transactions pursuant to the Arrangement Agreement. He added: “I firmly believe that this is the right transaction for the company. I am prepared to do what I can to see it through to successful completion.”
In addition to Mr. Stone’s Debentures, the Corporation has also received a firm commitment for the deposit of a further 336 Debentures on the same terms as Mr. Stone’s deposit. Management and the board are hopeful that other Debentureholders, particularly significant Debentureholders, will support the transaction and follow Mr. Stone in depositing additional Debentures to the Stone Offer.
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
Chief Executive Officer
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: the acquisition of the Corporation by Starlight Capital; the completion of the transactions contemplated in the Arrangement Agreement, the Debentures, the Stone Offer, whether further Debentures will be tendered to the Stone Offer, whether the AUM Condition will be satisfied under the Arrangement Agreement and whether Starlight Capital will complete the transactions contemplated under the Arrangement Agreement.
Forward-looking statements necessarily involve risks, including, without limitation, risks associated with the ability of the parties to the Arrangement Agreement to satisfy their closing conditions, general business, economic and social uncertainties; 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 and the general stability of the economic and political environment in which SIG operates. 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.