In the conclusion to what one Callidus Capital Corp. director called "a sad story,” shareholders approved an offer Thursday to take the alternative lender private in a deal that values the company at just $42-million.
Callidus is controlled by financier Newton Glassman and lends to troubled businesses. In the early stage of its five-year run as a public company, Callidus had a market capitalization of more than $1-billion. Mr. Glassman, chairman of Callidus, announced in 2016 that the company was considering going private and repeatedly held out the prospect of buying out shareholders for between $18 and $22 a share, based on a valuation from National Bank Financial.
However, several years of operating losses and writedowns on bad loans left the Toronto-based lender in “financial distress,” said David Sutin, a Callidus director and chairman of the special committee that oversaw its sale, as he recommended on Thursday that shareholders accept a buyout offer from Braslyn Ltd., Callidus’s second-largest shareholder.
If the bid by Braslyn was not accepted, Mr. Sutin’s committee previously had told investors that Callidus would likely be insolvent, and its shares would be worth nothing.
Callidus minority shareholders voted 78.7 per cent in favour of an offer to sell the company for 75 cents a share. The deal needed to be approved by a majority of minority shareholders.
Mr. Glassman, who is also the chairman of Callidus parent Catalyst Capital Group Inc., did not attend Thursday’s meeting.
One self-described “long-term” Callidus shareholder who attended the 15-minute meeting declined to give his name but, in an exchange with Mr. Sutin, said Callidus directors and officers will be released from any responsibility for the company’s affairs as part of buyout and said: “I am not happy about that.”
Mr. Sutin responded that the situation was “a sad story” and said: “You’re not a happy shareholder, and there is no reason you should be.”
Braslyn is controlled by British billionaire Joe Lewis, who owns a resort in the Bahamas called Albany where Mr. Glassman has a vacation home. Braslyn currently owns a 14.5-per-cent stake in Callidus, while Catalyst holds 71 per cent of the lender. As part of the buyout of minority shareholders, Catalyst made a number of concessions to Braslyn, including an agreement that gives Mr. Lewis’s company 15 per cent of the proceeds from future Callidus asset sales.
Callidus went public in 2014 at $14 a share. The stock closed Thursday at 74 cents on the Toronto Stock Exchange and is expected to be delisted by the end of November.
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