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
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.