Sun | Dec 17, 2017

Epsilon to continue fight for SVL stake at Privy Council

Published:Friday | August 25, 2017 | 12:00 AMMcPherse Thompson

Epsilon Global Equities Limited, which had an agreement with the founders of Supreme Ventures Limited, SVL, to acquire just over 18 per cent of the gaming company 15 years ago, has lost its latest battle in Jamaica's courts to claim the equity stake.

Epsilon, an American-owned special-purpose vehicle created for the SVL transaction, will be continuing the fight, however, and is preparing to take its case to the UK-based Privy Council.

That disclosure was made by Supreme Ventures Limited, which stated in its latest quarterly financial report that it expects to prevail against Epsilon, based on the advice of its lawyers. Supreme Ventures is a publicly traded company that is now largely owned by Greek company Intralot SA, which holds 49.9 per cent of the shares.

The Jamaican Court of Appeal threw out Epsilon's claim on the basis that the company had not satisfied its obligations under the forward sales agreements by paying for the shares within a specified period.

The respondents to the claim were Paul Hoo and Ian Levy, two of Supreme Ventures founding shareholders; Janette Stewart, the widow of Peter Stewart, another founding shareholder; and Martyn Viera, executor of the estate of Peter Stewart. They argued that Epsilon failed to pay the purchase price and execute and deliver undated instruments of transfer by the acquisition date as required by the agreements.

SVL shares are currently trading north of $8.70, which values the 18.2874 per cent stake that Epsilon is going after at $4.2 billion. The respondents' individual holdings in the gaming and lottery company combines to 24 per cent, according to stock market disclosures.

Epsilon Global Equities is part of the Epsilon Group, which is engaged in sourcing, structuring, managing, and monitoring investments for a family of investment funds.

Its lawsuit in the Jamaican Supreme Court was first thrown out in January 2011.

The agreements that Epsilon had with the founding owners of Supreme Ventures regarding the forward sale were reached in 2002 and 2004, and predated the company's going public. Epsilon was required it to pay $1 per share upon the acquisition date which was sometime in 2005.

Epsilon claimed that it sought to complete the transfer of the shares in 2008, but the founders refused or neglected its demands. The company was represented by attorney John Vassell QC.

In the appellate judgment written by Justice Hillary Phillips, and delivered earlier this year, the court held that there was a specific time set out for the purchase of the shares and Epsilon had not met the deadline.

Meantime, Supreme Ventures is awaiting the outcome of a related lawsuit in Florida, where Talisman Capital Alternative Investment Fund, a workout lender, and EGE, previously known as Epsilon Global Equities, have an appeal pending on the share transactions.

The company is among the defendants to that suit first filed in 2012.

SVL said the suit is in respect of the same issues decided by the Supreme Court in Jamaica in favour of the company and its founders. Talisman and EGE are trying to overturn a ruling of the Federal Bankruptcy Court in Florida, which in April 2013 granted a motion from the Jamaicans to have the case against them dismissed.

The appeal against the order has been heard and the court's decision is pending.

SVL and its founding directors were first sued by Epsilon Global Equities in December 2008.

It claimed then that SVL reneged on an agreement for the forward sale of shares to Epsilon, reached prior to a private placement done by the lottery company in mid-2005, and that the lottery company was also indebted to it.

Supreme Ventures countered that it had discharged the debt on October 31, 2005 from funds raised from a private placement. SVL went public early in 2006.

SVL said in e-mailed responses to Financial Gleaner queries that "the Talisman and EGE Limited suit being adjudicated in the Florida courts, concerns the same shares and substantially the same issues which are the subject of the Jamaican case. SVL and the other defendants were successful on their motion to dismiss the claims."

mcpherse.thompson@gleanerjm.com