CINAR Strikes Back With Lawsuit
Created 03/22/2000 - 01:00
files/pictures/picture-35.jpgAfter allegations of fraud, misallocated funds, shareholder lawsuits, executive shuffling, plummeting stock prices and subsidy suspension, CINAR Corp. said Monday, March 20, 2000 that it had filed a law suit against several companies believed to be connected with the US$122 million in unauthorized investments. This announcement comes after the Canadian Television Fund (CTF) and Telefilm Canada, which provide the main source of public funding for Canadian producers, suspended money to the producers of such shows as the Emmy Award-winning ARTHUR until full disclosure was given about the company's financial problems. CINAR's spokeswoman Suzan Ayscough said, "We are committed to providing clear answers to key issues." To end the now 11-day halt on the trading of CINAR stock, Toronto Stock Exchange and Nasdaq officials also await a conclusive report on the company's mounting problems. Ayscough said the company would provide a complete list of answers no later than April 14, 2000. The new suit helps CINAR shed more light on the dark shadow hovering over the animation house. Filed in the Supreme Court of the Bahamas, the suit is the company's first aggressive step to recover all the money and obtain increased information about the nature of the non-board-approved investments. "Based on our findings, we have determined that these proceedings are required to protect the interests of the company," CINAR Chief Executive Barrie Usher said. The three companies and one individual listed in the lawsuit are Norshield International Ltd.; its affiliates Globe-X Management Ltd. and Globe-X Canadiana Ltd.; and Robert Daviault, an officer of Globe-X Management Limited and/or Globe-X Canadiana Limited. The Bahamas-based Norshield International is a unit of Montreal-based Norshield Financial Group, which specializes in merchant banking and asset management. CINAR said it learned last month that about $122 million had been transferred without the board's authorization to Norshield International, where it was used to buy investment grade securities. The company tried to recover the money, but on March 3 found that the funds were held by Norshield affiliate Globe-X Management, which had used $86 million to purchase commercial paper from its affiliate Globe-X Canadiana. "They (CINAR management) have also been attempting to ascertain the underlying value of the commercial paper of Globe-X Canadiana, but management of Globe-X Management and Globe-X Canadiana have consistently refused to provide any substantive information with respect to the nature or value of the assets and liabilities of Globe-X Canadiana," CINAR said. As of Friday, March 17, CINAR said it had regained about $46 million of the missing money, while Globe-X management allegedly commands roughly $76 million in commercial paper issued by Globe-X Canadiana. The names of the companies involved were not released earlier in fear of breaking down talks between CINAR and Norshield.