GlobalNetFinancial.com has reached an agreement to sell its Canadian online brokerage subsidiary, CanadaInvestDirect.com for approximately US$1.34 million, to Toronto-based investment company Northern Financial.
CanadaInvestDirect will be combined with eNorthern, the online brokerage business of Toronto-based investment bank Northern Securities, and will operate under the eNorthern brand.
Northern expects that the acquisition will result in increased order flow and revenue to its online brokerage operation and lower overall costs.
The payment will be made by the issuance of approximately CDN$2,000,000 principal amount of debentures of Northern and approximately 8,300,000 warrants with 50% of the principal amount of debentures having a maturity date of December 31, 2001 and the other 50% having a maturity date of June 30, 2002. Northern will have the option to repay the debentures on each maturity date in cash or in common shares of Northern.
Tom Hodgson, chief executive officer of GlobalNetFinancial.com, says: "From a GLBN view-point, this is a step forward in the Globalnet strategy of streamlining, cost containment and maximisation of shareholder value."
The troubled online personal finance company recently announced plans to cut up to a hundred jobs, representing two thirds of its global workforce, in a bid to reduce spiralling losses and cash burn.