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A sign shows the entrance to the offices of Callidus Capital in Toronto on July 6, 2017.CHRIS HELGREN/Reuters

Callidus Capital Corp. shares tumbled 15 per cent to a new low after the lending company said chief executive officer Newton Glassman is stepping aside to take a medical leave.

Callidus also reported a deeper second-quarter loss and said it had revised some of its financial reporting following scrutiny by the Ontario Securities Commission.

Mr. Glassman’s medical leave, related to a severe lower back condition, comes after he missed Callidus’s annual meeting in July for health reasons. The company, the publicly traded arm of private equity firm Catalyst Capital Group Inc., said his duties will be taken up by the rest of the management team.

He will keep his positions as executive chairman and director, and also remain managing partner of parent firm Catalyst, Callidus said late Monday. Mr. Glassman is known for his pugnacious style, which he has displayed through numerous lawsuits he has filed against business adversaries. The Toronto-based financier controls both Callidus and Catalyst.

The stock fell 44 cents to $2.50 on the Toronto Stock Exchange in early afternoon trading on Tuesday, representing a drop of 76 per cent in the last 12 months.

Mr. Glassman needs two operations on his lumbar spine, Callidus said in a detailed explanation of his condition. During examination of Mr. Glassman’s lower back, physicians determined that his cervical and thoracic spine will need testing. In addition, there are indications of a possible neurological disorder, the company said.

The operations are scheduled for the early autumn, followed by an indefinite period of recuperation and rehabiliaton, Callidus said. “To the extent deemed necessary in the future by Callidus, Catalyst will provide personnel and/or resources necessary to ensure all of Mr. Glassman's functions at Callidus are fulfilled as seamlessly and efficiently as possible,” it said.

Callidus shares have come under heavy pressure this year as the company’s efforts to find a buyer at a target price above $18 a share have so far come up dry. Meanwhile, the firm, which lends to distressed companies, halted its dividend last month. The stock is down 72 per cent in the last 12 months.

In the second quarter, Callidus lost $40.8-million, or 75 cents a share, compared with a year-earlier loss of $25.8-million, or 51 cents. Revenue more than tripled to $89.4-million, as the company took over three businesses that fell into default on their loans, it said.

Callidus said it had received indications of an impairment on its loan to Otto Industries North America Inc., a North Carolina-based company that makes plastic litter and recycling bins, prompting an impairment to goodwill of $15.5-million in the period.

It recovered $7.4-million from Catalyst in its comprehensive income – which includes unrealized gains or losses not reported on the income statement – as part of a guarantee by the parent company on specific loan losses and other asset impairments. Year-to-date, the guarantee from Catalyst – which owns 72 per cent of Callidus – has translated into a recovery of $37.3-million in comprehensive income.

Callidus said it discontinued reporting a contentious financial assumption known as “unrecognized yield enhancements” after the Ontario Securities Commission expressed concern. That figure, which is not recognized by the International Financial Reporting Standards organization, totalled $77.9-million at the end of the first quarter.

It said the OSC had advised that it will keep Callidus on its refilings and errors list (companies required to give the regulator specified disclosure documents) for the next three years. The OSC had previously expressed concern about its reporting and had been monitoring its financial results.

Mr. Glassman has repeatedly discussed taking Callidus private and at one point set out a target price of $18 to $22 a share, based on a valuation by National Bank Financial. It said on Monday that it is still pursuing a privatization, but has nothing to report on the sales process, which began in 2016.

Analysts have said legal chill is one likely reason buyers are reluctant to come forward. Last year, Mr. Glassman launched a lawsuit against Greg Boland of West Face Capital, Wall Street Journal reporters and several other people, alleging they were part of a conspiracy to drive down Callidus’s stock price to benefit short sellers. Mr. Boland countersued, stating that he and West Face were not party to any conspiracy, and that he had closed out his short position in Callidus in 2015. The cases have yet to be decided.

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