First Global updates Fountain Asset litigation
2017-09-18 08:11 ET - News Release
Mr. Andre Itwaru reports
FIRST GLOBAL PROVIDES UPDATE ON LITIGATION AND FILES FRESH AS AMENDED STATEMENT OF CLAIM AGAINST VARIOUS PARTIES
First Global Data Ltd. has provided an update on the following developments in connection with its litigation with Fountain Asset Corp. and certain other parties.
As stated in the company's news release dated Feb. 13, 2017, the company was served with a notice of application and application record brought by Fountain, issued in the Superior Court of Justice of Ontario, court file CV-17-569015, commenced in Toronto, in which Fountain was seeking a court order that the company deliver to Fountain certain options to subscribe for and purchase 3,375,000 common shares of the company at 10 cents per share pursuant to the terms of a financial adviser agreement dated Aug. 29, 2015. In the application, Fountain also sought a declaration that Fountain is entitled to subscribe for and purchase 3.5 million common shares of the company at 11 cents per share pursuant to a warrant certificate, dated Aug. 31, 2015.
The company is vigorously defending the application. The matter came up for an initial hearing on Aug. 3, 2017, before Madam Justice Kristjanson of the Superior Court of Justice of Ontario. The company has various defences, but is primarily defending the application on the basis that the options and warrants are void and unenforceable since they were granted as part of a financing transaction bearing a criminal rate of interest in breach of Section 347 of the Criminal Code. As well, the company is asserting that the interest rate associated with the loan is in breach of the Interest Act, RSO, 1990.
Fresh as amended statement of claim
Furthermore, the company and its wholly owned subsidiary First Global Data Corp. have commenced an action (the 2017 action), by way of a fresh as amended statement of claim initially issued in the Superior Court of Justice of Ontario, court file CV-17-577847, on June 27, 2017 (and amended on Sept. 12, 2017), against Fountain and a number of other parties including Yoel Altman, Paul Haber, Paul Van Benthem and Jason Ewart and corporations associated with them. The company and First Global Data Corp. seek, among other things: damages in the amount of $20-million for breach of contract, breach of trust, negligent, reckless or intentional misrepresentation, unjust enrichment and conspiracy; a declaration that Mr. Altman, Mr. Haber and Mr. Van Benthem have conspired with the defendants, Mr. Ewart and Fountain, and with others for the issue and transfer of 26 million common shares of the company (FGD shares) to the defendants to the detriment of the company and its shareholders and to cause the company to assume the liabilities of LTP Financing Ltd. and other relief; and in the alternative, a declaration that Mr. Altman, Mr. Haber and Mr. Van Benthem have conspired with Mr. Ewart and Fountain and with others, or have otherwise wrongfully caused the company to issue 15,128,840 common shares of the company to Mr. Altman, Mr. Haber and Mr. Van Benthem and to cause the company to assume the liabilities of the LTP. The company and First Global Data Corp. also seek a court declaration and other compensatory relief against Fountain including (i) a declaration that the credit agreement dated May 14, 2015, entered into with Fountain was in breach of Section 4 of the Interest Act, and for an order pursuant to Section 5 of the Interest Act for the recovery of any interest or compensation received by Fountain in excess of 5 per cent per annum; (ii) an order that the FGD shares issued pursuant to the terms of the forbearance agreement dated Aug. 31, 2015, made with Fountain constitute interest both pursuant to the provisions of the Interest Act, and pursuant to Section 347 of the Criminal Code; or otherwise constitute an unlawful charge or penalty; (iii) for an order that the effective interest rate levied by Fountain pursuant to the credit agreement and forbearance agreement exceed 60 per cent per annum contrary to Section 347 of the Criminal Code; (d) an order for the repayment of all interest (including the FGD shares or their equivalent value), and for the repayment of all other interest, fees, penalties and charges paid by the company and/or First Global Data Corp. in excess of 5 per cent per annum.
In response to the application brought by Fountain scheduled to be heard on Aug. 3, the company and First Global Data Corp. brought a motion heard by the court on Aug. 3, 2017, to convert the application to an action, and to consolidate the action with the 2017 action. In her written endorsement dated Aug. 24, 2017, Madam Justice Kristjanson agreed with the company's motion request and directed that the application be converted to an action, and that the claims raised in the application be advanced as a counterclaim in the 2017 action. As a result of this ruling, the court is expected to adjudicate the issues raised in both the application and the 2017 action in the same proceedings at some future date not yet scheduled.
In her Aug. 24, 2017, reasons for granting the company's motion, Madam Justice Kristjanson found that the 2017 action and the application involved the same factual matrix, common legal and factual issues, and many common parties. The 2017 action and the application both involve: Fountain, the company and related parties, the failed acquisition of LTP, the financing extended by Fountain to the company, the relationship among Mr. Altman, Mr. Haber, Mr. Van Benthem and Mr. Ewart, and whether the options, warrants and FGD shares constitute interest under the Interest Act and/or Section 347 of the Criminal Code.
About First Global Data Ltd.
First Global is an international financial services technology company. The company's two main lines of business are mobile payments and cross-border payments. First Global's proprietary leading-edge technology enables the convergence of compliant domestic and cross-border payments, shopping, peer-to-peer (P2P), business-to-consumer (B2C) and business-to-business (B2B) payments. First Global enables its strategic partners and clients around the world with its leading-edge financial services technology platform.
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