Skip to main content
The Globe and Mail
Get full access to globeandmail.com
Support quality journalism
Just $1.99 per week for the first 24weeks
Just $1.99 per week for the first 24weeks
The Globe and Mail
Support quality journalism
Get full access to globeandmail.com
Globe and Mail website displayed on various devices
Just$1.99
per week
for the first 24weeks

var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(select.open)}function setPanelState(o){dom.root.classList[o?"add":"remove"](select.open),dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){console.log("scroll");var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))}pencilInit(".js-sub-pencil",!1);

Dragon’s Den stars Jim Treliving and Michael Wekerle (CEO of Difference Capital) attend a fundraiser at the Four Seasons Hotel, Wednesday April 2nd, 2014.

Jenna Marie Wakani/The Globe and Mail

Michael Wekerle has sold almost one quarter of the $10.7-million in debt he holds in Difference Capital Financial Inc. since mid Oct., and claims that a margin call from his broker, GMP Capital Inc. forced his hand.

In July 2013, Mr. Wekerle, who is the co-founder and CEO of Difference and a co-host of CBC TV's popular Dragon's Den program, bought $10-million in the company's convertible debentures through an account he holds at GMP, his former employer. At the time, Mr. Wekerle says, he put up $2.5-million and bought the rest on margin, meaning that he did not have to hold the funds in his account.

According to Mr. Wekerle, in August 2014 he received a letter from GMP that said, "We're taking your margin from 75 to 25 per cent. You have 30 days to come up with $5-million."

Story continues below advertisement

If Mr. Wekerle didn't come up with the cash, GMP said it would start "selling out" his position, according to Mr. Wekerle. He says he responded by saying, "'Guys that's impossible. I'm not going to do that.'" According to regulatory filings, $2.5-million of Mr. Wekerle's convertible debentures holdings were sold, in 10 separate transactions between Oct. 17th and Dec 10.

"GMP has another $1.3-million they can sell before it gets down to 25 per cent [margin]," Mr. Wekerle says. "I've been trying to move it [to other brokerage firms] but every time they seem to poison it for me."

The event has been evidently caused great distress for Mr. Wekerle. He added that GMP, the company which he co-founded, and where he had worked for 16 years as its star stock trader, would have known that the timing of the margin call was bad on many fronts.

"They know I bought $30-million in real estate in Waterloo, as I'm completing Dragon's Den and the stock [Difference Capital] is deteriorating. I've had an account at GMP since 1995. I have paid more interest in the lifetime of that firm than anybody else. If you're the biggest interest [payer], you think they'd treat you a little better."

Calls to GMP were not returned.

Mr. Wekerle insists that he didn't decline to post margin because he lacks the funds. "On a bad day, I'm worth $150-million. On a good day I'm worth $250-million." The problem he says, is that lot of his money is tied up in illiquid assets. "I am asset rich and cash poor."

The Difference Capital debentures, which are convertible to common stock, were issued in 2013 as part of a $50-million capital raising and are convertible at $5.75 a share. The further away the shares trade from the conversion price, the less valuable the debentures become. The stock, which closed at $0.99 Tuesday, has lost 80 per cent of its value since Difference went public in May 2012. The shares have rebounded, since trading down to $0.84 earlier in the month. The debentures last traded at $71.08 according to Bloomberg data, which was about 29 per cent below par value. According to the regulatory filings, Mr. Wekerle's debentures were sold at prices which ranged from $79 to $72.

Story continues below advertisement

"The optics suck," said Henry Kneis, CFO of Difference, referring to the transactions, in an interview. "But Mike is not the one making the decision. It is not a reflection in his faith, or lack of faith [in Difference Capital]."

Mr. Wekerle is by far the biggest common shareholder in Difference, with a 23 per cent equity stake valued at $8.95-million at current prices. His mother, Hermine Wekerle is the second biggest, holding 11.5 per cent of the company.

Difference mostly invests in private technology, media and health care companies. Its investments have performed poorly, with its portfolio about 22 per cent under water, and a cumulative net loss of $25-million over the past two quarters. Difference has been focusing on paring down its positions and readying a number of them for initial public offerings.

Mr. Wekerle admits there are still "problem files," but he's sanguine about the future of the company. "The firm is doing better," he says.

Report an error Editorial code of conduct
Tickers mentioned in this story
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies