MONTREAL — Embattled Canadian TV producer Cinar Corp. announced Wednesday that it has inked an interim agreement with Nassau-based Globe-X Management to allow it to assess investments made by Globe-X with Cinar funds.
As a result of the deal, Cinar has suspended its lawsuit against Globe-X and its affiliated companies.
But this is not a permanent settlement. The agreement does not resolve one of the key issues still pending between the companies, which is the payment schedule by which Cinar can regain the funds invested by Globe-X.
On March 20, Cinar filed suit in the Supreme Court of the Bahamas against Norshield Intl., Globe-X Management, Globe-X Canadiana and Robert Daviault, an officer of Globe-X, in an attempt to get back approximately $76 million invested by former Cinar execs in Globe-X Canadiana.
The Cinar investments in the Bahamas were made without the authorization of the Cinar board and only came to light as the result of an internal audit sparked by charges of tax-credit fraud last fall. Three of Cinar’s top executives — co-CEOs Ronald Weinberg and Micheline Charest, and senior executive vice-president Hasanain Panju — have been forced out of their jobs as a result of the financial scandal.
Execs from Cinar are hopeful that the financial information they will be able to gather from Globe-X will allow them to provide data to the Toronto and Nasdaq stock exchanges, which have suspended trading of Cinar shares until they have more details of the financial implications of the Bahamas investments.
One of the concerns of the Cinar execs is they still do not know exactly how the funds were invested and what the company’s liability is as a result of the investments.
“They are going to provide us with information so we can assess the collectability of those assets and whether we think when they mature we’ll be able to collect them,” Cinar president Barrie Usher said.
A spokesman from Norshield and Globe-X said the Nassau companies invested the money at the request of senior Cinar execs, including Panju and Weinberg.
“We’re pleased to have this adversarial period with Cinar’s current management behind us and we are co-operating with Cinar regarding the status of the assets under this interim agreement,” Globe-X spokesman William Urseth said. “The position of Globe-X has always been that we received the money, we have the money, we’re managing the money and we will redeem the money as per the redemption schedule.”
Court proceedings had started on Monday in Nassau, but are now suspended indefinitely.