CANADA - The C$125bn (US$80.1bn) pension fund giant Caisse de dépôt et placement du Québec (CDP) and its real estate subsidiary, Cadim, are being sued by the Prime Group over a failed real estate deal.
Prime is looking for the courts to penalise CDP and Cadim in excess of US$150m, following Cadim’s attempt to acquire the Prime Group Realty Trust (PGE), a real estate investment trust (REIT). The lawsuit accuses Cadim of secretly working with the Vornado Realty Trust to buy debt that is convertible into 33.6% of the REIT's stock, thus acquiring the REIT at a discounted price.
According to the lawsuit, Cadim entered into an exclusive agreement with Prime to acquire all the outstanding PGE stock from it. Cadim also agreed to fund a US$105m replacement loan to the Prime affiliate, Primestone Investment Partners, as part of the deal. Primestone had borrowed US$40m from Prudential Securities and $62m from Vornado, loans that were secured by the 33.6% block of PGE stock. At the end of October, Vornado acquired the Prudential loan and both loans were declared to be in default.
The lawsuit accuses Cadim of conspiring with Vornado in an attempt to “steal” PGE from Prime and its shareholders by foreclosing on loans, loans that Cadim had earlier committed to refinance. Prime believes that Cadim backed out of the deal as it had prior knowledge of Vornado’s actions.
Additionally, another CDP holding faces legal action. 407 International, which runs the 407 highway north of Toronto, is being sued by a Canadian lawyer that was charged a C$30 (US$19.10) penalty on a balance of 12 Canadian cents. 407 International is owned by a consortium that includes CDP, the Canadian construction and engineering firm SNC-Lavalin, and the Spanish firm, Grupo Ferrovial.
Should the class action lawsuit succeed, 407 International and the Ontario government would have to refund all late payment penalties charged to the highway’s users since it opened in 1997.
By Geoffrey Ho
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