Jun 14, 2021
MJardin eyes restructuring amid fallout from Bridging Finance scandal
Court orders PWC to take over Bridging Finance after scandal
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Bridging Finance has been under the management of PricewaterhouseCoopers Inc. since May after the Ontario Securities Commission (OSC) alleged the Toronto-based private lender and its senior executives mismanaged funds and failed to disclose conflicts of interest. The firm has $155.8 million in outstanding loans with MJardin.
In a press release late Friday, MJardin said it retained Restructur Advisors, a British Columbia-based boutique firm, to provide the special committee with general restructuring advice. Blair Jordan, one of the special committee's members and an MJardin board member, is also the managing partner of Restructur Advisors, according to the firm's website.
MJardin said there is no defined timeline for the completion of its special committee’s strategic review, and there is no guarantee that the process will end with a specific transaction.
“The company is focused on addressing the level of its indebtedness and management believes that a review of strategic alternatives will allow it to make informed decisions in the interests of all stakeholders," said Pat Witcher, chief executive officer at MJardin, in a statement.
As well, MJardin said Canaccord Genuity Corp. has resigned as financial advisor to the special committee and announced its chairman, Adrian Montgomery, won’t stand for re-election later this month.
MJardin frequently turned to Bridging Finance since 2017 when it needed funds to acquire two small cannabis companies as well as to build a new cultivation facility in Manitoba. The company initially borrowed about $30 million; its debt to Bridging Finance eventually ballooned to $155.8 million as it attempted to better compete in Canada's burgeoning legal cannabis market.
According to OSC staff allegations that have not been proven, former Bridging Finance Chief Executive Officer David Sharpe and his wife Natasha, who was chief investment officer at the firm, asked MJardin's then-CEO, Rishi Gautam, to accept a $35-million loan secured against the pot producer’s assets. Those funds were then allegedly lent back to Bridging Finance to buy out Ninepoint Partners, a Bay Street firm that was looking to end its ties with the lender in Oct. 2018. An OSC official has alleged the so-called “back-to-back arrangement” was not properly disclosed and that the $35-million loan was appropriated from Bridging Finance investment funds.