Holders of the multiple voting shares at Look Communications Inc. are expected to receive a circular from a buyer next week that wants to relieve them of their stake for 11? a share.
The offer is the latest twist at the company, whose major shareholder is Unique Broadband Systems Inc. (UBS), with a 37.6% voting interest, and whose activities have provided some fascinating slices of corporate life over the past three years.
For instance:
? How management and insiders should be rewarded when a company sells a major asset. On the UBS deal to acquire its stake, which generated $64-million in net proceeds, allegations were made that the insiders pocketed too much of the gain, all of which led to a successful dissident proxy battle at UBS, which then knocked on to Look. The proxy outcome led to numerous lawsuits and counter-suits. While none have been officially ruled upon, the dissidents have chalked up some wins.
? The role of the board and the extent to which it has, or not, held management accountable, given that some directors have reached settlements with the new management team/directors.
? The role of the courts, given that UBS entered bankruptcy protection in mid-2011 and has been given approval to sell its control block in Look.
? The nuances of dual-class share companies. The offer by Robert Ulicki and Jeffrey Gavarkovs is for the purchase of up to 45 million multiple voting shares. But holders of Look?s subordinate voting shares are allowed to convert those shares to multiple voters and tender to the offer.
? The role of the new insiders and the protection of minority shareholders. Ulicki is the chairman of UBS (and used to be a director at Look) but has recused himself from matters dealing with the sale of its Look block. On Ulicki?s offer, Look has formed a two-person special committe to monitor the sale of UBS?s control block. That committee?s goal: to monitor the ?sale process and ensure the interests of Look and its non-UBS shareholders are taken into account, protected and advanced in and by that process.? On Ulicki?s offer, Look?s board has not made any recommendation but has entered into a support agreement.
? The role of support agreements. Look?s agreement allows it to respond to? proposals for alternative transactions,? that may be in the best interests of Look?s shareholders.
? The matter of transparency. While all market participants talk about the need for transparency, Ulicki?s offer has ensured that it became a reality. His offer has forced other potential buyers ? for either the UBS block in Look or for Look?s multiple voting shares ? to go public. Investors know what Ulicki is planning and the terms of his offer as it will presumably be disclosed in the circular.
If he didn?t go public and if UBS sold its Look block under a court approved process, investors would not have known the full story.
? Deal dynamics and a strategic buyer. Alex Dolgonos is the largest shareholder at UBS. He also received some of the payments made after Look?s asset sale. And he is the subject of some lawsuits made by the new insiders. Given the effort (and expense) made by the new team at UBS/Look and the success they have enjoyed so far, it would seem unfair to open the door for the former insiders, presumably as a group, to regain control of Look, a move that could allow them to settle the lawsuits.
Source: http://business.financialpost.com/2013/01/08/look-communications-plan-needs-a-closer-look/
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