Equity Financial Holdings Inc. Responds to Smoothwater's Latest Attempt to Distract Shareholders
TORONTO, Dec. 12, 2013 /CNW/ - Equity Financial Holdings Inc. (TSX: EQI) ("Equity" or the "Corporation") responded to statements made by Smoothwater Capital Corporation ("Smoothwater") in a recent press release. Smoothwater is acting jointly with Nick Kyprianou and Darryl Ivan (the "Terminated Employees"), ex-employees of the Corporation's subsidiary, Equity Financial Trust Company ("Equity Trust"). The Terminated Employees were fired in October 2013 upon a unanimous decision of Equity's board of directors (the "Board"). In addition to demanding their old jobs back in the place of current senior management, the Terminated Employees and Smoothwater are demanding to replace a majority of the Board.
Smoothwater has proposed an advisory resolution and amendments to the Corporation's by-laws to restrict the ability of the board of directors elected at the upcoming Annual and Special Meeting of Shareholders, and any future board, to fulfill its duties and set the strategy for the Corporation, pursue strategic transactions, or access financing. Smoothwater has itself acknowledged to the Corporation that these proposals do not comply with the procedural requirements of the Canada Business Corporations Act. In any event, Smoothwater's proposals are nothing more than a distraction since they would have no effect until after the shareholders meeting.
The Board is undertaking a process to evaluate all realistic alternatives for enhancing shareholder value. Notwithstanding Smoothwater's allegations to the contrary, there has been no attempt to entrench the Board or management. Any value maximization alternatives put forward by the Board will require some form of shareholder approval or acceptance, or otherwise comply fully with all applicable shareholder democracy requirements. Smoothwater's efforts to distract the process before the Board has completed its work and made its recommendations are misguided and destructive of shareholder value.
The Board will continue to engage with shareholders and consider their views. In connection with the upcoming Annual and Special Meeting of Shareholders, the Corporation will provide a management information circular that will be mailed to shareholders and posted on the Corporation's website and SEDAR.
About Equity Financial Holdings Inc.
Equity is a Canadian financial services company serving the alternative retail mortgage market through its federally regulated and wholly-owned subsidiary, Equity Financial Trust Company. Learn more at www.equityfinancialholdings.com.
Forward Looking Information
Certain portions of this press release as well as other public statements by the Corporation contain "forward-looking information" within the meaning of applicable Canadian securities legislation, which is also referred to as "forward-looking statements", which may not be based on historical fact. Wherever possible, words such as "will", "plans," "expects," "targets," "continue", "estimates," "scheduled," "anticipates," "believes," "intends," "may," and similar expressions or statements that certain actions, events or results "may," "could," "would," "might" or "will" be taken, occur or be achieved, have been used to identify forward-looking information. Such forward-looking statements include, without limitation, the Corporation's expectations in respect of earnings, fee income, expense levels, general economic, political and market factors in North America and internationally, interest rates, global equity and capital markets, activities, the Corporation's expected need for equity on debt financing, business competition, technological change, changes in government regulations, unexpected judicial or regulatory proceedings, catastrophic events, and the Corporation's ability to complete strategic transactions and integrate acquisitions and other factors.
All material assumptions used in making forward-looking statements are based on management's knowledge of current business conditions and expectations of future business conditions and trends, including their knowledge of the current credit, interest rate and liquidity conditions affecting the Corporation and the Canadian economy. Certain material factors or assumptions are applied by the Corporation in making forward-looking statements, including without limitation, factors and assumptions regarding interest rates, availability of key personnel, the effect of competition on the Corporation's business, government regulation of its business, computer failure or security breaches, future capital requirements, its ability to fund its mortgage business, the value of mortgage originations, the competitive nature of the alternative mortgage market, the expected margin between the interest earned on its mortgage portfolio and the interest to be paid on its deposits, the relative continued health of real estate markets, acceptance of its products in the marketplace, as well as its operating cost structure and the current tax regime.
Forward-looking statements reflect the Corporation's current views with respect to future events and are subject to a number of risks and uncertainties. Actual results may differ materially from results contemplated by the forward-looking statements. Readers should not place undue reliance on such forward-looking statements, as they reflect the Corporation's current views with respect to future events and are subject to risks and uncertainties and are necessarily based upon a number of estimates and assumptions that, while considered reasonable by the Corporation, are inherently subject to significant uncertainties and contingencies. Many factors could cause the Corporation's actual results, performance or achievements to be materially different from any future results, performance, or achievements that may be expressed or implied by such forward-looking statements, including a significant downturn in capital markets or the economy as a whole, significant increases in the cost of complying with applicable regulatory requirements, civil unrest, economic recession, pandemics, war and acts of terrorism which may adversely impact the North American and global economic and financial markets, inability to raise funds through public or private financing significant changes in interest rates, failure by Equity Financial Trust Company ("EFT") to meet ongoing regulatory requirements, the failure of borrowers or counterparties to honour their financial or contractual obligations to EFT, failure by EFT to adequately monitor and/or adjust its mortgage portfolio management practices for changing circumstances, failure by the Corporation to attract and to retain the necessary employees to meet its needs, failure by EFT to adequately monitor the services provided by third party service providers or to establish alternative arrangements if required, failure by EFT to secure sufficient deposits from securities dealers or a sufficient level of mortgage origination from its mortgage broker network, a failure of the computer systems of the Corporation or one or more of its service providers or the risks detailed from time-to-time in the Corporation's quarterly filings, annual information forms, annual reports and annual filings with securities regulators. The preceding list is not exhaustive of possible factors. The Corporation disclaims any intent or obligation to update or revise publicly any forward-looking statements whether as a result of new information, estimates, future events or results, or otherwise, unless required to do so by applicable laws.
SOURCE Equity Financial Holdings Inc.For further information:
Equity Financial Holdings Inc.
Paul G. Smith
President & CEO
(416) 361-0152 Ext 270
Bayfield Strategy, Inc.