An investment firm says it financed Drake's OVO, wrote protections into the deal for exactly this situation, and then watched the brand get sold without hearing about it first.
A.R.I., a Florida-based firm, has filed a 391-page document in Ontario Superior Court over money it says OVO owes. The figures in AllHipHop's report do not sit neatly together: the filing is described as claiming over 5 million dollars in unpaid obligations, while A.R.I.'s own calculation as of 31 July comes to 3.5 million, made up of principal, interest, default fees and what the agreement calls a Make Whole Fee. A separate action the firm filed in British Columbia in June put the figure at 3.2 million.
The Make Whole Fee is the centre of the dispute. According to the filing it was negotiated before A.R.I. invested, not added later as a penalty, and it guaranteed the firm a minimum 15 per cent return if its convertible notes did not turn into equity before maturity. OVO chief executive Derek Jancar signed off on it. A.R.I. says it would not have provided the financing without that protection.
The notes also carried rights that were supposed to trigger on an acquisition: either conversion into equity at a discount, or a cash payment worth 40 per cent more than the original principal. A.R.I. says it got neither, and that it found out about the transaction from a public announcement three days after it closed on 24 August.
The transaction in question was substantial. On 27 August Authentic Brands Group announced it had acquired 51 per cent of OVO's intellectual property, in a deal valuing the IP at 117,647,058.82 dollars, with Drake retaining 44 per cent and Vince taking 5 per cent.
"We received no portion of the transaction proceeds," a spokesperson for A.R.I. said, adding that information about how the deal treated the firm's rights has still not been provided despite repeated requests, and that it will pursue that through the court.
One point in AllHipHop's account deserves care. Its headline says the Securities and Exchange Commission is involved, but the body describes something narrower: public documents filed with the SEC state that OVO debt was to be repaid and that convertible noteholders would be paid directly from the purchase price. A.R.I. says it never received a payoff letter, never authorised the release of its claims and never saw any proceeds. That is a discrepancy between a filing and an outcome, not a reported regulatory investigation, and nothing in the report describes the commission opening one.
No response from Drake or OVO has been reported, and none of the claims has been tested in court. Authentic Brands' purchase was itself reported as a majority stake in the brand's intellectual property rather than of the company outright. More hip-hop coverage sits on our genre hub.
The facts
- A.R.I. filed a 391-page claim against OVO in Ontario Superior Court.
- The firm puts the outstanding sum at 3.5 million dollars as of 31 July.
- An earlier British Columbia action in June claimed 3.2 million dollars.
- A Make Whole Fee guaranteed A.R.I. a minimum 15 per cent return.
- A.R.I. says it learned of the sale from a public announcement.
- Authentic Brands Group bought 51 per cent of OVO's IP, announced 27 August.
- The deal valued the intellectual property at 117,647,058.82 dollars.
- No response from Drake or OVO is reported.
How this checks out
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