Bridging Finance Inc. investors are calling for an investigation into the troubled private lender's sale process by PricewaterhouseCoopers Inc. (PwC), alleging that the firm's proposed wind-down by its appointed court monitor will be too costly and would be better managed elsewhere.
An Ontario court appointed PwC to take control of Bridging Finance on Apr. 30 at the request of the Ontario Securities Commission.
That decision was made pending the outcome of an investigation into allegations the lender and its then-senior executives, including Chief Executive Officer David Sharpe and his wife Natasha, who was chief investment officer at the firm, mismanaged funds and failed to disclose conflicts of interest. The Sharpes were subsequently fired from their roles after PwC stepped in. The allegations have not been proven in court.
According to a release issued Monday night from a group that purportedly represents Bridging unitholders, PwC is allegedly trying to insert itself to wind down the firm’s funds over a five-year period while collecting high management fees that could cause steep losses to the firm's portfolio. The investor group is calling on all Bridging investors to call for a vote and request the firm's assets be managed by an active portfolio manager rather than the wind-down proposed by PwC.
Approximately 25,000 retail investors invested in Bridging Finance's funds before PwC took control of the lender. It is unknown how many people are part of the investor group behind the release and have expressed concerns about PwC's handling of the Bridging Finance sale process.
A PwC spokesperson told BNN Bloomberg in an email that the company will not respond to public statements and will communicate through the PwC website or court statements.
A court filing in December made by PwC suggests that Bridging's losses attributed to unitholders could be about $580 million, roughly 36 per cent of the $1.6 billion the firm lent out. That would leave Bridging with approximately $1 billion in funds that investors would be able to redeem.
The investor group added that PwC also has a lack of experience in managing private debt and is not a registered portfolio manager. It also noted concerns it has about PwC not recovering loans awarded to First Nations communities valued at $250 million and a lack of discussion regarding the $400 million in cash controlled by Bridging that has yet to be distributed back to investors.
The release states that New York-based money manager BlackRock Inc., which controls about US$10 trillion in assets, would be the "best option" for the investor group that is seeking a "positive long-term investment." Representatives from BlackRock were not immediately available to comment on Bridging's sale process.
A court filing from December from PwC stated that 11 companies submitted final bids to buy Bridging during a bidding process to sell the private lender. Four of those bids sought to acquire the entire firm while the others looked to acquire parts of Bridging's portfolio. A follow-up report from PwC said it would be able to make a recommendation on who should acquire Bridging's assets "by mid-February" following a series of investor webinars scheduled to begin in January.
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