Control of Look in question after Craig files suit against wireless ISP and cable provider

Craig Wireless International Inc. has taken its fight for control of Look Communications Inc. to the courts, filing a statement of claim last month against the company seeking to undo transactions made in the months leading up to and during Look’s annual general meeting (AGM) on May 14. Craig Wireless, which currently has a 29.9% ownership stake in Look with an option to purchase an additional 2.57%, is battling Unique Broadband Systems Inc. (UBS) and its wholly owned subsidiary UBS Wireless Services Inc., holders of an equal 29.9% stake in Look and with an option to up its stake to 51%. Craig Wireless’ Proxy Denied at Look’s May 14, 2003 AGMBoyd Craig, president of Craig Wireless International Inc., attended Look Communications Inc.’s annual general meeting on May 14 and voted against two proposals. One needed a two-thirds majority and involved the creation of a new class of non-voting shares (amendment proposal). A second required a simple majority and related to a motion to amend the stock option plan. Craig Wireless’ proxy was deemed invalid because Boyd Craig lacked a resolution (a piece of paper) from Craig Wireless’ board of directors appointing him to represent the company’s proxy. "Craig says that the ruling made by Cytrynbaum declaring the Craig proxy invalid was improper, without authority and without any foundation in law. Moreover, Craig says that had its vote as cast by Boyd Craig been counted, the amendment proposal would not have obtained the requisite majority," reads the statement of claim. Craig contends that this is only one instance of inappropriate behaviour by Look’s board of directors and that previous actions are prejudicial and aren’t in the best interest of all shareholders. Boyd Craig, president and CEO of Craig Wireless, tells Report on Wireless that the company has been stymied in its efforts to gain control of its eastern-based MDS counterpart. "This whole lawsuit is part of that. Our intention was to acquire voting control and we were stopped in our path towards that." The suit, filed in Manitoba’s Court of Queen’s Bench on July 28, claims, among other things, that certain actions taken by Look’s board of directors in the months preceding and during the AGM were prejudicial and wants these transactions reversed. Specifically, Craig refers to the following acts: A January 2003 private placement under which UBS acquired 19.99% in Look; Reconstituting the board following the January 2003 private placement; Approving a March 2003 rights offering; Failing to adhere to the policies of the TSX Venture Exchange; and Failing to comply with national policies of Canadian securities administrators. Look chair and interim president and CEO Michael Cytrynbaum tells RoW that the company will be responding to Craig’s statement of claim by the early September deadline, but refused to provide details of its response. However, Peter Block, a representative for UBS, tells RoW, "the position from UBS is that it is a frivolous case. (Look’s) legal opinion and legal advice is that they’ve done everything by the books and the transactions are perfectly legitimate and should be able to stand." Craig Wireless, an MDS spectrum licensee in Manitoba and major centres in British Columbia, wants to acquire a controlling interest in Look to be able to expand into the lucrative eastern Canadian market. Look holds a significant chunk of MDS spectrum in Ontario and Quebec. "We’re a pretty major player in the (MDS) spectrum in the west and we believe it only makes sense for us to expand into eastern Canada," Craig says. Details of Craig Wireless’ national strategy are still sketchy, but Craig says a mobile broadband access service will be an offering. "The spectrum that we’re in and the technology is fast evolving and the spectrum has been earmarked in the United States and designated for mobile communications. So I see in the future that we’re going to be offering such services as mobile broadband access and once you get into that business I think it makes sense to have a national footprint," Craig says. While Craig Wireless wants to use Look’s spectrum holdings to break into the eastern market, Look and UBS have been undertaking a massive review of operations to decide the fate of the Milton ON-based wireless cable and Internet provider. The Craig Wireless lawsuit may throw a wrench into those discussions. Responding to questions about the company’s second-quarter financial results released August 11 and the future of the company, Cytrynbaum was vague. When RoW asked about the importance of residential and business high-speed Internet to Look, Cytrynbaum said that will be influenced by how the company goes forward. When asked what the company is doing to begin growing its TV subscriber base again, Cytrynbaum said, "We haven’t decided what we are going to do on a going forward basis. It’s something we are actively working on and over the next three to five or six months I believe we will have an approach that we will all be happy with. "We are examining the entire situation right across the board and then we will decide the approach we will take. But the answer is we are aware of those items and we are working on them."

Control of Look in question after Craig files suit against wireless ISP and cable provider

News | 08/26/2003 4:00 am EDT

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