Home / Insurance Tips / Pivot’s nemesis Torrent Capital presents alternative plan that would benefit all shareholders

Pivot’s nemesis Torrent Capital presents alternative plan that would benefit all shareholders

Torrent Capital proposes moving Pivot's listing to the TSX from the TSX Venture.

The war of words between Torrent Capital, a significant shareholder in Pivot Technology Solutions, and also the company about how exactly best to proceed considering a proposed going private transaction continues.

Torrent fired the most recent salvo this week C the 3rd it’s made since Pivot announced its share exchange transaction two weeks back. Torrent said it represents the interests of holders of approximately 12.2 percent of the company.

Torrent’s statement is made a few days after Pivot provided “further clarification” on its “share exchange transaction,” that will, provided shareholders agree, hand charge of the company to a group of insiders, with the rest of the shareholders slated to possess preferred securities which are set to pay for higher distributions than are actually paid around the common shares.

That transaction is becoming controversial for several reasons, including:

The extent to which Pivot sought out alternatives either after or before the so-called Founder Group (the insiders) lobbed its proposal at the begining of this past year. In the statement, Pivot said while it held discussions with three investment dealer firms, it “elected to not engage in a formal process to seek potential alternative transactions, because it was considered unlikely that the superior proposal would materialize;”The plans for any “private” Pivot. When the deal is approved, Pivot will sign a consulting agreement with Inflexionpoint, a personal company founded by some of the same people who founded Pivot. Pivot said the proposed consulting agreement will give it US$1.5 million annually, will run for 10 years and “provides additional cushion with regards to the proposed distributions on the Preferred Securities.”

In its latest statement Torrent has replaced its previous stance of “vehemently” opposing the transaction, with a six-point alternative plan. Although it still believes the proposed transaction “blatantly short changes Pivot shareholders to the benefit of a select few insiders,” it believes its plan would benefit all shareholders.


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