GreenBank Capital Inc (CSE:GBC) said it has exited investments in three non-core portfolio companies, namely Reliable Stock Transfer Inc, Inside Bay Street and The Lonsdale Group as it continues to streamline its investment portfolio.
GreenBank said it has agreed to sell its 10% stake in Reliable, a Toronto-based small-cap transfer agency, for C$225,000 to Zara Wettreich, an insider of GreenBank who is also currently the 90% controlling shareholder of Reliable.
Wettreich provided a series of loans totaling C$657,681 to GreenBank in 2019 and 2020 which were later exchanged into 5-year, 3% convertible loan notes, with interest payable annually on March 11. The sale of GreenBank's 10% interest in Reliable to Wettreich will reduce the balance of these loan notes by $225,000, and upon completion, Wettreich will retain loan notes totaling $432,681. GreenBank has paid the annual 3% interest payment on the full principal amount of the loan notes to Wettreich as scheduled.
GreenBank acquired its 10% interest in Reliable in June 2017 for $150,000, with $50,000 paid in cash, and $100,000 paid by the issuance of 333,333 common shares of GreenBank at a deemed price of $0.30 per share. The sale of GreenBank's 10% stake of Reliable for $225,000, therefore, represents a 50% profit to GreenBank in relation to the original acquisition cost.
GreenBank Capital is identifying future Unicorns in the post-pandemic landscape
Separately, GreenBank said it has agreed to sell its 19% interest in Inside Bay Street, a Toronto-based financial news communications company, in exchange for $4,045, an amount equal to the outstanding debt that GreenBank owed to Inside Bay Street, a company with minimal identifiable assets.
GreenBank made the strategic decision to exit the investment in exchange for relief of 100% of its debt obligation. GreenBank originally acquired its 19% interest in Inside Bay Street in a non-cash transaction on September 18, 2017, which was payable by the issuance of 40,000 $1 Non-Voting 5% Series D Preference Shares. In July 2018, these shares were exchanged for 19,284 common shares of GreenBank and the Series D Preferred Stock was subsequently removed as a share class.
Additionally, GreenBank said it has agreed to sell its 10% interest in The Lonsdale Group LLC, a Dallas, Texas-based private equity company focused on small-cap Investments to David Lonsdale in exchange for 114,937 common shares of GreenBank Capital and 163,384 common shares of Ubique Minerals. GreenBank intends to return the 114,937 shares of GreenBank common stock back to its treasury, thus reducing the total number of Greenbank's issued and outstanding shares.
David Lonsdale is a former director and CEO of GreenBank who resigned in August 2021 due to family medical reasons. For these same reasons, he has indicated that he is unable to actively pursue developing The Lonsdale Group business. Therefore, GreenBank and Lonsdale have collectively decided that this exit is in the best interests of each party.
GreenBank is a next-generation merchant banking business that has a flexible low-cost overhead structure designed to maximize profitability.
Contact the author at jon.hopkins@proactiveinvestors.com