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Dawkins Brown strikes deal for Croskery shares in SSL - But acquisition in doubt as board ­demands meeting

Published:Wednesday | December 18, 2019 | 12:00 AMKarena Bennett/Business Reporter
Dawkins Brown
Mark Croskery
Zachary Harding
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Dawkins Brown, the head of Dawgen Global, has acquired Mark Croskery’s 12 per cent stake in SSL Growth Equity Limited, or SSL Group, a holding company registered in Barbados for brokerage and investment firm Stocks & Securities Limited and its affiliates.

Croskery, who resigned as chairman and CEO of SSL Venture Capital Jamaica on September 13, sold his shares in the SSL Group to Brown to obviate conflict of interest, based on his desire to start his own private equity outfit, among other interests.

But the deal now appears to be in jeopardy.

Months after the agreement was struck, the registration of the shares in Brown’s name remains outstanding.

In a statement to the Financial Gleaner, SSL Group noted that numerous invitations were issued by its representatives to Brown to meet and discuss the transfer of the shares.

However, Dawkins Brown, who is managing partner of accounting firm Crowe Horwath Jamaica, chairman of Dawgen Global and new owner of BATV since July, sees no reason to meet. He contends that it is sufficient that SSL Group’s board was advised of the share sale.

Still, SSL Group listed the accountant’s interest in the firm that was founded by Croskery’s father, Hugh Croskery, as one of the main issues to be brought to conclusion, among several ongoing initiatives to reform the group.

Other changes to the ownership structure of SSL Group are also being finalised, namely the stake being acquired by Hyperion Equity Inc, which was announced in September. Hyperion’s principal, Zachary Harding, who succeeded Mark Croskery in mid-September, declined to comment on the size and cost of the acquisition before the deal closes.

SSL Group said of its efforts to meet with Brown that in all instances he replied that he was either travelling or unable to meet. The board subsequently decided, after discussions that it would not approve the sale without a prior meeting with Brown, and that it was interested in proposals from other investors.

“The board remains open to investors who may wish to purchase Mark Croskery’s shares, but we need to go the proper process for due diligence,” SSL Group CEO Harding told the Financial Gleaner.

The International Business Companies Act (IBC) of Barbados provides that an individual, if exiting the business, should first offer their shares internally and, if refused, the shares can be sold externally. The IBC Act also provide that the board of directors approve the transfer of shares.

Brown insists that the next step required in the process is action by the SSL board to register his 12 per cent interest.

“It is required that the board needs to know if a shareholder has sold its shares, it is reasonable; and so the shares have been sold and the board has been notified,” Brown told the Financial Gleaner.

“Now that they know who has purchased the shares, their duty is to take those share documents and send it to the Barbados IBC registry. I understand that there is some resistance in doing that, but I’m sure they will sort themselves out,” he said.

SSL Growth shareholdings are not publicly disclosed. However, its founder, Hugh Croskery currently stands as the largest shareholder.

Ian Wilkinson, the lawyer retained by Croskery to ensure completion of the deal among other interests in SSL Group, told the Financial Gleaner that Croskery first offered the shares to the other shareholders, who, for “whatever reasons best known to them decided that they would not acquire the shares, and that Brown was then selected as the preferred buyer.

SSL Growth Equity added SSL Ventures to its group of companies in August 2018 following the reverse takeover of loss-making music publisher C2W Music.

But since then, SSL Ventures and the parent company have been going through a series of changes.

The group, which up to February was made up of six subsidiaries, lost two of its CEOs, Lamar Harris and Drew Gray, and Mark Croskery replaced Gray as CEO of SSL Ventures.

Through a notice on the Jamaica Stock Exchange on June 1, SSL Ventures announced changes to its management and board, including the appointment of Zachary Harding as director. Days later, the shares of SSL Ventures were suspended after the company’s auditor, Baker Tilly Strachan Lafayette, avoided giving an opinion on the company’s audited results for the year ending December 2018 due to what it described as insufficient information on its subsidiary companies. The shares remained suspended until October 2.

SSL Ventures’ suspension was followed by the resignation of Andre Burnett, the CEO of Muse 360 Integrated, one of three portfolio companies of the publicly traded SSL Ventures, forcing SSL to weigh new options for that operation.

Croskery resigned from the group on September 13, and on September 16 Harding began to serve as CEO of SSL Ventures and Stocks and Securities Limited, in addition to being CEO of SSL Growth Equity.

SSL Ventures, which holds equity positions in unlisted companies Bar Central at 75 per cent, Blue Dot Media Intelligence at 50 per cent, and Muse 360 Integrated Limited at 51 per cent, is still bedevilled by losses – it bled $25.6 million in the September quarter, after posting losses of $45 million in the fiscal period ending June.

Under Harding’s leadership, SSL Group began restructuring its assets to fit its core private equity operation, while maintaining the brokerage business of Stocks & Securities. The company recently sold its remaining 50 per cent in SSL REIT Jamaica to business partner Kingston Wharves and intends to offload its microfinance and cambio outfit, Dolla Financial.

“We have not sold Dolla Financial. We are exploring selling, though, and have interested parties,” Harding said. “We are hoping to have something done by end of first quarter next year, giving enough time for due diligence in finding the right buyer.”

The subsidiaries of SSL Growth Equity now include SSL Asset Management Limited (Cayman); SSL Capital (Cayman) Limited; SSL REIT Investors Limited (St Lucia); and SSL Jamaica and its subsidiary SSL Ventures. But changes are also under way for SSL Ventures.

The company has since ditched plans to acquire a 20 per cent stake in a radiology company, Alpha Imaging, and is weeks away from acquiring a fintech business through its listed venture capital subsidiary.

But, as for the sale of Croskery’s 12 per cent stake, the timeline for resolving it is unclear.

Croskery contends that the board of SSL has “no good reason for refusing to approve the sale of the shares to Dawgen,” his lawyer said via email.

“Our client is surprised and disappointed at the action of the board of SSL Barbados, which he views as highly unreasonable and extremely oppressive to him, particularly being a minority shareholder,” said Wilkinson.

Harding has pushed back, however, saying that while Mark “is trying to paint the company in a light as prejudicing him as a minority shareholder”, his interest in SSL Growth Equity is not considered a minority stake, neither by law in Barbados nor by international custom.

karena.bennett@gleanerjm.com