Sagicor Investments Jamaica Limited (SIJL) has filed a lawsuit against Cornerstone Financial Holdings Limited and the members of its Board of Directors in the Supreme Court of Barbados.
The claim is related to actions taken by the Board of Cornerstone Financial Holdings Limited in connection with the two recent Rights Issues by Cornerstone United Holdings Jamaica Limited.
SIJL are seeking damages from Cornerstone Financial Holdings Limited (CFHL) and its directors in excess of US$4 million for the issuance of CFHL shares, valued at more than US$6 per share for a subscription price of less than US one cent per share, to only those of its shareholders who had participated in a Rights Issue in July 2020 by its affiliated company Cornerstone United Holdings Jamaica Limited (CUHJ).
SIJL did not participate in this Rights Issue.
SIJL is also seeking an order restraining the Board of Cornerstone Financial Holdings Limited from again issuing shares at the same undervalued subscription price of less than US one cent, only to the band of shareholders who chose to participate in the Rights Issue of CUHJ in August 2021.
In October this year, UNC Senator Wade Mark raised questions concerning First Citizens Bank’s investment in Cornerstone, prompting Cornerstone to refute his claim that the company was a Ponzi scheme.
State-owned First Citizens is a six per cent equity holder in Cornerstone's parent company, Barita. First Citizens bought the shares through its wholly-owned subsidiary First Citizens Investment Services (FCIS).
Mark had called on the Government to conduct an internal forensic audit into this “bizarre transaction and opaque arrangement and to direct FCB not to invest any more of depositors money” into the company.
He had also asked the Minister of Finance to explain the bank’s decision to invest US$39.2 million ($269 million) in a small brokerage firm and to loan US$25 million ($170 million) to a St Lucia offshore company known as Cornerstone Financial Holding Ltd, “where the shareholder and beneficial owners are unknown and remain a mystery to the people of Trinidad and Tobago”.
Cornerstone has written to the Bank of Jamaica concerning the action taken by Sagicor, highlighting that SIJL had previously been granted a “4.50 per cent shareholding” in Cornerstone United Holdings Jamaica Limited and had benefitted from the interest shared through a “mirror principle” shared with Cornerstone Financial Holding.
The letter written by Cornerstone Chairman Mark Myers said Sagicor’s shareholding dropped to 2.77 per cent due to their non-activity in Cornerstone’s capital raises.
Myers added, “SIJL has indicated, a desire to divest itself from the shareholding in Cornerstone, and in recent communication, has, among other things sought to frustrate efforts by Cornerstone to raise Capital.” Myers noted that has repeatedly threatened legal action against Cornerstone unless Cornerstone agreed Cornerstone buy back its shares from SIJL.
Myers said Cornerstone has no interest in doing that but would aid SIJL in finding a buyer for the shares.
Myers stated that based on legal advice he had received from both Barbados and Jamaican law firms, he was confident Cornerstone would see off the claim.
Just last month, Myers announced another of Cornerstone’s equities, Barita Investments, yielded profits of $4.1billion Jamaican dollars or USD$26.3 million for the fiscal year ended September 30, 2021.
Myer said then the performance was boosted by the over-subscription of a September 2021 Additional Public Offering, which Myers said solidified the company.
“Barita decided to return to the capital markets for funding and was able to complete another significant Capital raise via and oversubscribed APO in September 2021, which raised an additional $10.8 billion in permanent capital from over 3,000 subscribers,” he said.