TORONTO, Nov. 18, 2013 /CNW/ - Equity Financial Holdings Inc. (TSX: EQI) ("Equity" or the "Corporation") announced that a partnership controlled by Smoothwater Capital Corporation ("Smoothwater") has requisitioned the calling of a meeting of shareholders for the purpose of removing seven of nine incumbent directors and appointing three new directors to form a board of five directors. Smoothwater has also announced that it is acting jointly with Nick Kyprianou and Darryl Ivan (together with Smoothwater, the "Joint Actors") and intends that Mr. Kyprianou be appointed CEO of the Corporation's subsidiary, Equity Financial Trust Company ("Equity Trust"), and Mr. Ivan be appointed Equity Trust's Chief Risk Officer. Messrs. Kyprianou and Ivan's employment in these positions was terminated last month upon a unanimous decision of the board of directors. The Joint Actors have disclosed that together they own shares and securities convertible into shares representing approximately 14.7% of the Corporation's issued and outstanding shares.
The board of directors of the Corporation has formed a special committee (the "Special Committee") to supervise the Corporation's response to this shareholder action. The Special Committee is comprised of Bradley Kipp, Thomas Spencer and Donald Wright, each of whom is an independent director of the Corporation. The Special Committee's mandate includes considering the strategic direction proposed by the Joint Actors and alternatives thereto, all with a view to continuing to enhance shareholder value. Hansell LLP has been appointed as independent legal counsel to the Special Committee, and a financial advisor is expected to be appointed.
In responding to the shareholder action, the Special Committee will consider Smoothwater's meeting requisition and, if valid, the Corporation will comply with its obligation to call a special meeting of shareholders within 21 days of receiving the requisition. The requisition proposes that three Smoothwater nominees be appointed as directors. These nominees, Stephen Griggs (the CEO of Smoothwater), Mr. Kyprianou and Glen Silvestri (a self-employed professional investor), are proposed to constitute a majority of the board of directors. Smoothwater has also communicated that it intends for Mr. Griggs to be appointed Chair of the Board.
The Office of the Superintendent of Financial Institutions Canada ("OSFI") requires that all financial institutions establish policies and procedures, referred to as a Responsible Persons Policy, to assess the suitability and integrity of individuals proposed as directors and senior management. A financial institution's Responsible Person Policy reflects the fact that the suitability and integrity of directors and senior management are an important concern for the institution and also for OSFI, as the safety, soundness and reputation of the institution can be negatively affected by the actions of these individuals.
As part of assessing the proposed changes in directors and senior management, the Special Committee will oversee Equity Trust's process of applying its Responsible Persons Policy to the proposed individuals and will be requesting from them the consents and information required by the policy to help in assessing their suitability and integrity.
Torys LLP is acting as Equity's legal adviser, Shorecrest Group Ltd. as its proxy adviser, and Bayfield Strategy, Inc. as its strategic communications adviser.
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.