David and Natasha Sharpe, of Bridging Finance Inc., in the company's downtown Toronto offices on April 11, 2019.Bridging Finance Inc. received a $126-million emergency cash infusion last year that gave new institutional backers better rights and more seniority than existing retail investors – but decided not to ask existing investors if they approved, according to documents reviewed by The Globe and Mail.
Despite the complexity, Bridging initially kept investors in the dark about the new infusion, and was given legal advice that the transaction did not require their consent. Bridging’s emergency funding was briefly addressed in an April 29 interview between Mr. Sharpe and two officials from the OSC, but at the time mostly high-level details were provided, such as the main investor , and the amount outstanding.
Asked to comment on the deal’s terms, including whether the seniority was necessary because Bridging was viewed as a risky borrower, RCM wrote in an e-mailed statement that it “purchased senior undivided participations in certain of Bridging’s funds at full value. We are co-operating fully with the receiver and all other aspects of this transaction are subject to confidentiality obligations.”
Why wasn’t the regulator informed? If informed, why didn’t it require disclosure?