Sometimes, private transactions are far messier than public transactions, despite what many retail investors think. It appears that ThreeD Capital (CSE: IDK) has found itself in such a situation, with respect to the much hyped New Found Gold Corp (TSXV: NFG), which is set to IPO next week following the close of its $1.30 per share offering. It’s been revealed, via New Found Gold’s prospectus, that ThreeD is suing the company in relation to a share sale transaction that occurred last year.
As it turns out, this past March ThreeD launched a lawsuit, along with 1313366 Ontario Corp, via the Ontario Superior Court of Justice against Palisades Goldcorp, New Found Gold, and Collin Kettell. Kettell is the Chairman & CEO of Palisades as well as Executive Chairman of New Found Gold. The lawsuit is in connection to the purported validity of a share sale conducted between the parties in November 2019.
The share sale was conducted between ThreeD, the numbered company, and Palisades Goldcorp, with a total of 17,500,000 common shares being exchanged for a price of $0.08 per share. While the transaction has since closed, the claim is that Palisades and Kettell were aware of certain positive drill results from the 2019 drill program that had not been disclosed to ThreeD, which was to ThreeD’s detriment. Given that New Found Gold was private at the time, the company had to approve of the proposed share transfer, thus bringing them into the lawsuit.
Within the lawsuit, ThreeD and the numbered company have made claims for a number of things, including:
- Recission of the share purchase agreements on the basis of oppression.
- Or, as an alternative, damages amounting to a total of $21.0 million.
- A declaration by both Palisades and Kettell that as shareholders and a director of New Found Gold that was oppressive and unfairly prejudicial.
- A declaration by both Palisades and Kettell that they engaged in insider trading.
- Unjust enrichment.
- Interests and costs.
All of the claims have been refuted by both Palisades and Kettell. New Found Gold, for their part, has filed a statement of defence in response to the claims, among which it denies that it is a “proper party” to the claims. This defense is further enforced by no relief being claimed against the company.
New Found Gold is currently expected to begin trading on the TSX Venture on the closing date of the associated financing, currently estimated as being August 11, 2020. The financing is expected to raise anywhere between $15.0 million and $27.3 million in gross proceeds for the firm.
Information for this briefing was found via Sedar and New Found Gold. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
3 Responses
Jay,
Thank you for warning investors in all things Sheldon Inwentash.
Does he include this asset in the NAV.
How does ThreeD Capital account for asset?
Nice to know shareholders of this tiny fund is paying the legal bill for his stupidity of buying an asset with their monies and losing it.
I went to sedar to read what accountant signed off on filing
69 Yonge St rental is by hour like Wework yet charges $250K a year
salaries a couple million, stock options 200 – 600k, promotion 250k. Hard to tell if he having a family Reunion not running a public company?
good article…historically these claims take forever to get throught the courts and appeals….however it is important to know if IDK actually sued the right people first.
Well done Jay…great investigational work