Controlling shareholders of troubled Bridging Finance Inc., Jenny and Rock-Anthony Coco, are in talks to sell their family road-flooring business, has learned.
Founded in Windsor, Ont., but now based in Toronto, Cocoa Paving Inc. has grown substantially over its 50-year history, most notably through the 2009 acquisition of multinational Lafarge SA’s street-floor properties in Ontario and Quebec. . Ms. Coco is the company’s chief executive officer and oversees the Lafarge deal, but she is now looking to sell, according to four people familiar with the negotiations.
The Granthshala is not identifying the sources because they are not authorized to speak publicly about the potential sale.
Cocoa Paving operates primarily in Ontario, but other properties include paving and civil construction works in Manitoba and Saskatchewan, which were part of the company’s expansion efforts over the past decade. Cocoa Paving is a division of parent company Cocoa Group, which also builds homes and owns a golf course in the Windsor area.
In total, the Paving Company has 34 asphalt plants, operates 17 regional offices and employs approximately 3,000 people. Because it is a private business, revenue and profits are not publicly available.
Interested buyers are expected to include private equity firms, according to a person familiar with the sale, because when it comes to ESG (environmental, social and governance), they have more leeway than public companies. . Asphalt and concrete are energy-intensive businesses.
Lawyers representing the Cocoa Group, Ms. Coco and Mr. Coco, who goes by Rocky, did not return multiple requests for comment.
The Coco family’s succession plan is unclear since the death of family patriarch Guglielmo (Bill) Coco in December 2018. Ms. Coco does not have children. He has two brothers, one of whom works for the family business.
The current sale talks coincide with an ongoing scandal at private lender Bridging, where hundreds of millions of dollars have disappeared from 26,000 primarily retail investors.
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Receiver of Bridging Finance estimates losses to investors at least $580 million
Cocos controls the lender with a 58 percent stake, and Ms Coco was one of eight people who sat on Bridging’s credit committee, which approved the loans.
It is not clear whether there is a connection between the potential sale of the paving company and the crisis of bridging. The Ontario Securities Commission, which received court approval last April to put Bridging under the control of a receiver, has not made any direct allegations of misconduct on the part of Cocos. This fact was highlighted by a lawyer for Cocos in the first court proceedings relating to bridging. Most of the allegations to date pertain to David Sharp, the former CEO of Bridging.
However, OSC’s investigation is ongoing, and proceeds from any sale will attract the attention of the receiver of the bridging, in addition to any possible allegation. In November, The Granthshala reported that the lender’s investors expected to lose between $800 million and $1 billion, and last month the receiver, PricewaterhouseCoopers LLP, said investors expected to lose at least $580 million. .
The total loss should be known soon, as PwC is currently running a sell-off process for bridging and the final bids will put a floor on any losses.
Determining who is ultimately responsible for these damages can take years in court. While Cocos has not been targeted by OSC to date, they have already agreed to repay investors in a related matter.
In 2019, the owners of Bridging sold a 50-percent stake in the company to financier Gary Ng for $50 million. Bridging owed Mr. Ng $100 million in debt at the time, and some of this money was used to buy his stake in the business. Shortly after, an industry regulator alleged that Mr. Ng had misplaced his collateral for these loans.
To resolve the issue, Kokos and Natasha Sharp, Mr. Sharpe’s wife, bought Mr. Ng’s $50 million stake in Bridging back in March 2020 for $5. (Ms. Sharp was Bridging’s chief investment officer and minority shareholder of the company, along with. Cocos.) The co-owners subsequently paid $42 million in cash to Bridging’s investors using their share of profits and incentive fees earned in 2020 promised to repay $ 20 million to investors.
By early 2021, $38 million was still to be paid out to investors, but the bridging was put into receivership only a few months later.
Apart from this balance, it is not clear whether the investors have any claim on the assets of the Coco family. Even if they do, the ownership structure of Cocos’ assets has still not been determined.
For example, around the time Mr Ng’s shares were repurchased for $5, Bridging faced funding troubles as Canada went into its first COVID-19 lockdown. As financial markets tumbled, panicked investors filed redemption requests amounting to 10 percent of Bridging’s assets under management. With the economy in free-fall, the lender could not sell its illiquid loans fast enough, and was forced to close its funds and close investors.
Around this time, on April 3, 2020, Ms. Coco moved her home in Toronto’s affluent Forest Hill neighborhood to her husband, Michael Visocchi, for $2. The home was jointly purchased in September 2017 for $8.6 million without any mortgage. Ms Coco did not respond to multiple requests for comment on the transfer.
Coco Paving was founded in 1964 by Nina and Bill Coco and originally specialized in concrete paving, but shifted to focus on asphalt in the 1980s. Rocky Coco worked for business back in summer jobs during high school and Jenny Coco joined the company in the late 1980s.
In 2009 Coco Paving acquired Lafarge’s assets, moved the business east away from Windsor, and the head office moved to Toronto. At the time, Lafarge’s business had annual sales of $500 million and employed 1,200 people.
Bank of Montreal underwritten the acquisition, and Natasha Sharp worked in corporate credit at the bank. Ms. Coco and Ms. Sharp quickly developed a tight bond, and in 2011, Ms. Sharp joined the Cocoa Group’s board of directors.
The following year, Ms. Sharp began bridging with financial support from Jenny and Rocky Coco.
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