Troubled Voxtur sells majority stake in Blue Water

Voxtur Analytics is selling a majority stake in Blue Water Financial Technologies to a group of "strategic mortgage investors" led by University Bancorp, shortly after defending a proxy fight involving Rice Park Capital Management.

In 2022, Rice Park Capital sold Blue Water Financial Technologies to Voxtur for $101 million in cash and stock.

This new sale cuts the valuation significantly. The University Bancorp group is picking up a 50.5% stake for an upfront cash payment of $30 million, plus the possibility of up to $9.5 million in earn out bonuses.

(Voxtur is a Toronto-based company with businesses on both sides of the border, including providing title insurance alternatives; the transaction dollar amounts are U.S.)

Rice Park Capital mounted a challenge to the Voxtur board, led by its CEO Nicholas Smith, and included in its slate Al Qureshi, Blue Water's president. If the dissidents had won, Qureshi would have been installed as Voxtur's CEO, a June 19 press release said.

But, no alternative director nominations were made at the company's annual meeting, a Voxtur release on June 28 said.

"This transaction is not driven by or at all related to Rice Park Capital Management's failed proxy bid last month," a Voxtur spokesperson said in a statement. "The deal with University Bancorp was a strategic goal of Voxtur's intended to strengthen its financial position and provide new avenues for investments and tech development, and it was in the works long before the proxy bid occurred. The purpose of this transaction is to bring on strategic partners in order to extract additional value from the Blue Water platform and strengthen Voxtur's balance sheet by removing corporate debt."

Among the dissident's complaints was the company's financial condition. Voxtur took a 5.73 million net loss in Canadian dollars in the first quarter ($4.14 million in U.S. dollars at the July 30 exchange rate).

The sale will apparently deal with some of those issues. Voxtur plans to use most of its proceeds to pay off outstanding debt owed to Bank of Montreal.

"This joint venture not only strengthens our financial position but also opens new avenues for strategic investments and technological enhancements," Voxtur CEO Gary Yeoman said in the press release.

Qureshi still remains with Blue Water, however. He is quoted in a July 25 press release about a partnership between Voxtur/Blue Water and non-qualified mortgage lender Deephaven Mortgage.

"Our expertise in streamlining financial operations aligns perfectly with Deephaven's vision for enhanced mortgage management," Qureshi said. "We are committed to delivering exceptional value and are excited to assist Deephaven in achieving new levels of efficiency and effectiveness."

The other investors with University Bancorp, which is headquartered in Ann Arbor, Michigan, were not disclosed. However, these "have been strategically selected for their ability to leverage the Blue Water platform in their existing mortgage asset trading business," the Voxtur spokesperson said.

University's operating units include: UIF, a faith-based banking firm; University Lending Group, a retail residential mortgage originator; subservicer Midwest Loan Services; Community Banking; Ann Arbor Insurance Centre; Reverse Mortgage Lending; Mortgage Warehouse Lending; and, Hyrex Servicing, a mortgage asset management firm.

"The joint venture with Blue Water brings substantial synergies to our existing businesses and to Blue Water," said Stephen Lange Ranzini, CEO of University in the press release. "In addition, we plan to leverage our ability to add technology to Blue Water's Mortgage Asset Marketplace Platform to enable enhanced value-added services for its mortgage industry clients."