Blue Heron Financial has entered into a settlement agreement with Merchant Capital Group Inc. and One Hundred & Eighty Degrees Capital Corp. as a result of litigation commenced by Merchant Capital against Blue Heron, 180 Capital and other defendants.

Under the terms of the settlement agreement, Blue Heron has agreed to, among other things, transfer ownership to Merchant Capital of all the shares in Blue Heron’s wholly owned subsidiary, @rgentum Management and Research Corporation, a Quebec-based manager of the @rgentum Group of Mutual Funds.

In addition, the terms of the settlement require that Blue Heron transfers to Merchant Capital the dealer network contained in Blue Heron’s wholly-owned subsidiary, Blue Heron Wealth Management Inc., as well as certain related employees.

In consideration for entering into the settlement agreement, Merchant Capital has agreed to cancel, as it relates to Blue Heron only, any of Blue Heron’s obligations owing to Merchant Capital in respect of $1,382,206 secured convertible debt Merchant Capital holds in @rgentum (convertible into shares of Blue Heron), less the sum of $355,000. In respect of $355,000 of the secured debt, Blue Heron has agreed, subject to regulatory approval, to convert such amount into 3.55 million (postconsolidated) common shares of Blue Heron at 10¢ per share.

The settlement agreement and related share issues are subject to regulatory and shareholder approvals but has received the approvals of the board of directors of both Merchant Capital and Blue Heron.

Blue Heron has called a special meeting of its shareholders to be held March 28; at which it will also be seeking shareholder approval to a 2:1 share consolidation and a change of name.

Certain directors of Blue Heron have agreed to resign in favour of new nominees of 180 Capital. The nominees proposed initially are Stephen Burns, Philip Beaudoin and Robin Ross. It is also proposed that Burns will become the chairman of the corporation, Beaudoin will be appointed chief executive officer, and Ross will be named managing director.

Blue Heron management said that although Greg Levi, the former president, CEO and a director of Blue Heron, has commenced a claim for wrongful dismissal, the firm believes the claim is without merit and intends to defend it vigorously.