Article by Critchley on Fin Post re the ongoing UBS struggle
A long but worthwhile read below, explaining what is going on and why long suffering shareholders who were raped and pillaged by AD, GMcG and their pals should vote for Ulicki before April 30 for the upcoming AGM on May 4.
Even if AD's nebulous proposal for a business based on a medical imagery company had any potential for future profit, I will never again trust him or get involved in any business dealings that involve him.
Is anyone surprised he has remained silent concerning pursuing GMcG/Jolian to return what he stole from shareholders and that the courts have ordered him to pay back?
I don't ever again want to have anything to do with AD or anyone of his ilk.
I am voting for Ulicki.
Hope all shareholders who have been through the AD/GMcG experience vote for him too.
If nothing else, if Ulicki wins he will distribute the Look/ONEnergy shares to UBS shareholders, and at least those shareholeders who have been burnt will be able to recover some of their losses.
If AD wins, say bye bye to that.
In my estimation, Ulicki needs at least 10 M shares to win.
Give AD nd his croonies a clear message.
Vote for Ulicki. Every vote counts.
From Financial Post:
https://business.financialpost.com/news/fp-street/battle-resumes-at-unique-broadband-systems-as-former-execs-plan-comeback
Battle resumes at Unique Broadband Systems as former execs plan comeback
Barry Critchley | April 9, 2015 8:33 PM ET
Five years back, a group of disgruntled Unique Broadband Systems shareholders — led by Grant McCutcheon, Henry Eaton and Robert Ulicki — convinced enough owners to oust the board and set the company on a different path.
The new group barely had time to find the boardroom before they were hit with $16 million in lawsuits from two insiders, Alex Dolgonos (a technology consultant) and Gerry McGoey (the former chief executive.)
In turn, the new board, which as part of the successful proxy battle gained control of the company’s 39%-owned subsidiary, LOOK Communications, filed its own lawsuits. Those suits were largely based on “egregious compensation and board integrity” made to insiders following the net $64 million sale of LOOK’s spectrum. Unique Broadband (which is in bankruptcy protection) and LOOK (now known as ONEnergy) have managed to win virtually all of those actions — even if they haven’t collected.
Now some of the former Unique Broadband team is hoping to make a comeback with the battle to be played out at this year’s May 4 annual meeting.
In the one camp is Ulicki, a money manager with Clareste Wealth Management and who resigned from the board last December. He has filed a 20-page circular, listed the other two director nominees Paul Tepsich (a money manager with High Rock Capital) and Thomas Murphy (a seasoned real estate executive) and detailed his plan.
Part of the plan is to distribute some or all of the ONEnergy shares. Ulicki, a fixture at Unique Broadband for the past four and a half years, also plans to consolidate the shares on a ratio of one new share for each 25 old shares.
Ulicki, who also plans to preserve and utilize Unique Broadband’s tax losses, is firm on one point: “Do you want to pursue the collection of $1.6 million Joilan Investments [McGoey’s company] owes UBS,” he asks on the second page of his circular, noting the Ontario Court of Appeal found that “McGoey breached his fiduciary duties owed to UBS and ordered the McGoey Parties to pay $1.6 million to UBS.”
But to collect that $1.6 million, Unique Broadband, which has already spent $6 million on defending and pursuing the claims, may be required to raise additional equity of up to $500,000.
In the other camp is Dolgonos, who the management circular says owns an 11.94% stake. As of Thursday he hasn’t filed a circular. Accordingly not much is known of his plans.
But in the 28-page management circular, UBS does give some detail. He has named three director nominees: Henry Kloepper (chief executive of NWT Uranium ,whose shares have been suspended since Aug. 2013, but a subsidiary of which has an 11% stake); Daniel S. Marks (president of Stonehouse Capital) and Riadh Zine (a former banker who runs Elite Imaging.)
The group plans to keep the ONEnergy shares, raise $1 million in a private placement and pursue “a business combination in a form to be determined with an existing medical diagnostics business.”
Dolgonos is silent on pursuing the $1.6 million owned by Jolian.
Unique Broadband offered no recommendation, preferring to “facilitate in a neutral fashion an orderly transition to a new board of directors,” which will decide what to do once the company exits CCAA proceedings.
In a high stakes game, getting the shareholders to vote will be key for both sides.
Financial Post
bcritchley@nationalpost.com
https://business.financialpost.com/news/fp-street/court-of-appeal-sides-with-unique-broadband-systems-against-former-ceo-gerald-mcgoey
Court of Appeal sides with Unique Broadband Systems against former CEO Gerald McGoey
Barry Critchley | July 11, 2014 11:04 AM ET
Four years back a group of dissident shareholders were elected to the board of Unique Broadband Systems, a holding company whose main asset was a 37% stake in Look Communications.
The dissidents – led by Grant McCutcheon, Robert Ulicki and Henry Eaton – swung into action because of the large payments made to insiders at both Look and UBS in the wake of the $80-million sale of Look’s spectrum. Net proceeds to the company were $64 million.
Since then the various parties at both companies have been in litigation: The new board has been trying to recover some of the more than $20 million that was paid (or slated to be paid) to the former insiders, while the old board and the individuals have been trying to retain the payments that have either been paid or are owing.
And in general the new board has been winning the legal battles – either at trial or at subsequent appeal.
The new board continued that trend Thursday when the Ontario Court of Appeal ruled in UBS’s favor and against Jolian Investments and Gerald McGoey, the former chief executive at UBS and Look. (McGoey controls Jolian.)
UBS had filed an appeal to a lower court ruling that determined Jolian was entitled to an enhanced severance of about $4 million while Jolian filed a cross appeal against a lower court ruling that determined it wasn’t entitled to indemnification.
In a release UBS said that the Appeal Court granted “the company’s appeal and dismissing the Jolian parties’ cross appeal. The Court of Appeal decision is a vindication of the company’s opposition to the Jolian parties’ claims at trial and its appeal of the trial decision,” it said.
The statement added that the Court ordered the Jolian parties “to disgorge $200,000 that was advanced to the Jolian parties before McGoey was removed from the Company’s board by shareholders and to pay the costs of the trial and the appeal.”
The three justices of the Appeal Court – Sharpe, Gillese and Hourigan – wrote that the trial judge “did not err in finding that Mr. McGoey breached his fiduciary duties to UBS.”
In another part of their decision, the three wrote that “the conduct of Mr. McGoey, in establishing the SAR [stock appreciation rights] cancellation awards and the bonus pool and thereby preferring his own interests of UBS, qualifies as a serious breach of fiduciary duty.” After the sale of Look’s spectrum assets, UBS set up a $3.4-million bonus pool, of which $1.2-million was allocated, but not paid, to McGoey.
Clifford Cole, a partner at Gowlings, the firm that acted for UBS on the appeal, said that the decision is important for at least three reasons:
“It affirms the nature and importance of fiduciary duties for officers and directors of a corporation; and,
“It clarifies the business judgment rule which protects officers and directors from second guessing by the court. The decision makes it clear that this only applies in the event that the officer or director has acted on an informed basis, honestly, in good faith and in the best interests of the corporation and its shareholders; and,
“The decision makes it clear that these fiduciary duties cannot be contracted out and a company and its management, cannot, by contract remove or relieve a director or officer of these fiduciary duties.”
Joe Groia, the lawyer representing Jolian and McGoey said, “we need a chance to consider the reasons and decide on our next steps.”
https://business.financialpost.com/executive/management-hr/how-greed-doesnt-pay-even-if-its-your-golden-parachute
Bucking fiduciary duty doesn’t pay — even if it’s your golden parachute
Howard Levitt | July 22, 2014 12:10 PM ET
On the surface, Gerald McGoey had a lucrative deal. The chief executive of Unique Broadband Systems Inc. was protected by a golden-parachute provision that provided enhanced termination benefits in certain circumstances and a share appreciation rights plan (SAR) with another payout based on the price of the company’s shares. But as is often the case, overreaching consumed it all.
In 2003, Unique Broadband bought a majority interest in Look Communications. Look owned a telecommunications spectrum that it sold for a disappointing $80-million to a consortium made up of Rogers and Bell.
After the sale, shares of Unique Broadband languished at around $0.15, instead of jumping to the $0.40 or so expected. Disappointed, the board — all of whom had SAR units — cancelled the existing plan and established a SAR cancellation payment based on a price of $0.40 a share.
It also established a bonus pool of $3.4-million (rejecting McGoey’s proposal of $7-million). McGoey would receive $600,000 as his SAR cancellation award and a $1.2-million bonus. In addition, McGoey and the board of directors established a SAR cancellation payment and bonus pool for Look. Bringing the total funded in these new compensation plans to about $15-million — an astounding 97.6% of Unique Broadband’s total market capitalization.
When the shareholders resisted, McGoey had the company advance him an additional $200,000, his expected legal fees to defend these entitlements. At a special shareholders’ meeting , McGoey and the other directors were removed, prompting McGoey to resign as CEO, taking the position he had been terminated because he was not re-elected to the board. This triggered an enhanced severance of $9.5-million, which he sued to enforce.
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The Ontario Court of Appeal noted that McGoey, as a director and CEO, owed Unique Broadband fiduciary duties. “Any director or senior officer is in a position of trust. He or she is charged with managing the assets of a corporation honestly in a manner that is consistent with the objects of the corporation … [McGoey] had a specific obligation to scrupulously avoid conflicts of interest to the corporation, not to abuse his position for personal gain.”
In implementing the SAR cancellation awards and bonus, the board had no independent advice that could speak to the reasonableness of the amounts. Nothing had occurred to increase the value of the company, let alone to $0.40. Under the original SAR plan, McGoey would have been entitled to $75,000, not the $600,000 the new plan afforded.
The Court of Appeal noted, “The decision to implement this new scheme was driven by the board’s self-interest.” As such, the Court set aside the plan and, for the same reasons, the bonus. Similarly, his breach of fiduciary duties disentitled him to any severance.
Notably, the fact that the board of directors affirmed his actions was no defence. Breaches of fiduciary duty violate the interests of the corporation and cannot be condoned by superiors or contracted out of.
The court also rescinded the legal fees McGoey advanced to himself. Although indemnity provisions protect officers and directors from lawsuits flowing from the good faith performance of their duties, “the rationale for offering the protection is eliminated where the officer or director is not acting in good faith and in the best interests of the corporation,” it said.
Canadian law has a “business judgment rule” whereby the courts will defer to business decisions honestly made. However, the court here noted that “it would not sit idly by when it is clear a board has engaged in conduct that has no legitimate business purposes and that is in breach of its fiduciary duties” and the rule will not protect decisions made without an honest belief they were in the best interests of the company.
Citing the trial judgment, the court held that “we will decide whether business judgment is what was exercised here, or whether it was self-help, or worse, breach of fiduciary duty, dressed in business judgment’s clothes.”
I am seeing an increasing abundance of executives using corporate assets as their personal piggy bank. Increasingly, the courts are asking, “when an executive makes a decision that advantages herself, was she acting in the company’s interest, or largely her own?”
If it is the latter, it is not only cause for discharge but cause for a lawsuit against that employee to recoup those assets.