Alterna becomes new home for PACE assets

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On April 21, the Financial Services Regulatory Authority of Ontario (FSRA) – appointed in 2018 to oversee PACE’s operations amid allegations of misconduct and mismanagement – announced an upcoming transaction that “will establish a new lane for PACE” in a letter credited to union members.

Today, Alterna Savings revealed that it is on the other end of the deal.

Alterna Savings announced that it is acquiring PACE’s loan portfolios and deposit accounts, as well as the company’s branches and head office in Vaughan, Ontario. PACE employees will also join Alterna.

Terms of the transaction were not disclosed.

Subject to regulatory approval and other closing conditions, the agreement is expected to close in the second quarter.

“Alterna Savings is excited to bring a new era of stability and confidence to PACE members and employees. And, as a reputable and experienced partner, we pride ourselves on continuing to improve the [credit union] the long-term sustainability and stability of the system through this transaction,” Rob Paterson, President and CEO of Alterna, said in a statement.

“FSRA’s decision to have PACE participate in this transaction follows a careful evaluation of the various options available to PACE in light of the impact of pre-administration mismanagement and the Covid-19 pandemic,” it said. said the regulator in its letter.

The letter also said that the FSRA “will continue to vigorously pursue legal actions against the former senior executive and certain former directors of PACE, as well as others, to recover damages and losses caused by their mismanagement. ARSF will also determine the eventual liquidation process of the PACE legal entity.

Although the FSRA did not disclose details of the transaction, its letter stated that Investment and Profit Shares (which are held by approximately 2% of PACE members) and PACE Member Shares, which cannot currently be redeemed due to impaired capital position, will be dealt with as part of the liquidation process.

These shares “will remain with PACE and will be dealt with as part of the winding up of the PACE legal entity” – although it is unclear what this will mean for these shareholders.

“We cannot speculate on the timeline for the completion of this process or the final outcome,” the FSRA said in its letter.

Due to the pending transaction, PACE will not be holding an annual general meeting this year, the letter states.

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