Cornerstone Financial Holdings Limited (CFHL) is confident that it will successfully defend itself against Sagicor Investments Jamaica Limited’s (SIJL) lawsuit.
In a statement, Cornerstone said it has sought legal advice on the merits of SIJL’s claim and based on advice received from senior counsel from both Barbados and Jamaica, it is of the view that both CFHL and its directors should be able to successfully defend SIJL’s claim of over US$4M.
Cornerstone also explained that in June 2018, SIJL, a wholly owned subsidiary of Sagicor Group Jamaica Limited (“SGJ”), was engaged by CFHL and Cornerstone United Holdings Jamaica Limited (together, “Cornerstone”) to act as arranger and underwriter with respect to financing CFHL’s 75.0% majority acquisition of Barita Investments Limited (“Barita”) via a takeover bid on the Jamaica Stock Exchange (“JSE”).”
Cornerstone said in return for its services, SIJL was compensated via fees and separately was granted a 4.50% shareholding in both CUHJL and CFHL for nominal consideration. Cornerstone said between June 2018 and September 2019, the Sagicor Group earned over US$3.5M through a series of fund-raising transactions with Cornerstone and its affiliates in fund-raising fees.
Cornerstone said SIJL has recently offered assets earned through its Cornerstone relationship over the past three years, for sale at US$12.5M, totals approximately US$17.0M.
However, Cornerstone said in June 2020, it indicated to SIJL as well as its other shareholders its intention to raise additional equity capital via a rights issue to further capitalize its subsidiaries. The 2020 Rights Issue closed in July 2020 and was oversubscribed but before closure of the 2020 Rights Issue, Cornerstone received a letter from SIJL indicating its intention to abstain from participation in the 2020 Rights Issue. This decision, Cornerstone said, prompted SIJL’s shareholding to fall from 4.50% to 3.47%.
However, one year on, Cornerstone said it was informed by SIJL that it suffered losses of US$4.058M resulting from the 2020 Rights Issue and SIJL demanded compensation. SIJL claimed that these losses were the result of the dilution of its shareholding following the 2020 Rights Issue.
However Cornerstone maintained the stance that the reduction in SIJL’s stake was due to their abstention from the 2020 event.
Cornerstone confirmed that SIJL’s shareholding was reduced further after another capital raise was arranged in July 2021. Following which SIJL informed Cornerstone that it would consider legal action unless “Cornerstone bought or guaranteed the sale of SIJL’s Cornerstone shareholding”.
On Monday, Sagicor Investments Jamaica Limited (SIJL) began legal proceedings against Cornerstone Financial Holdings Limited and the members of its Board of Directors in the Supreme Court of Barbados.
Cornerstone recently borrowed US $25 million from First Citizens and First Citizens is the second largest shareholder in Barita Investments, which is majority owned by cornerstone.