‘Ottawa’ Catalyst Capital Sues Former Wind Mobile Owners for $750M Over Alleged Conspiracy, Breach of Contract
A Toronto-based private equity firm is suing a group of Wind Mobile’s former owners for $750 million for allegedly breaching an exclusivity agreement and conspiring to thwart it from buying the cash-strapped wireless carrier two years ago.
Catalyst Capital Group Inc. accused a consortium of investors including Globalive Capital Inc. — Wind founder Anthony Lacavera’s investment firm — and West Face Capital Inc. of using confidential information from Catalyst’s negotiations with VimpelCom Ltd., Wind’s owner at the time, to kill Catalyst’s deal and buy Wind for themselves, according to a statement of claim filed in the Ontario Superior Court of Justice this week.
The $750-million windfall is what Catalyst estimates it would have earned had it been the successful bidder for Wind, which Shaw Communications Inc. ultimately purchased from the consortium for $1.6 billion in January 2016. Catalyst is also seeking $1 million in punitive damages for the alleged conspiracy.
UBS Securities Canada Inc., Tennenbaum Capital Partners LLC, 64NM Holdings GP LLC, 64NM Holdings LP, LG Capital Investors LLC, Serruya Private Equity Inc., Novus Wireless Communications Inc. and Mid-Bowline Group Corp. are also named in the lawsuit.
In the court documents outlining Catalyst’s version of events, the firm states its negotiations to buy Wind from VimpelCom were far enough along that the parties signed an exclusivity contract preventing VimpelCom from soliciting or considering other offers from Jul. 23 to Aug. 19, 2014. A deal was finalized in principle on Aug. 3, it states.
But by then the consortium, which had tried to buy the carrier that spring, caught wind of the exclusivity agreement from the bank involved in the deal and started working behind the scenes to concoct a better offer that would lure VimpelCom into breaching its contract, Catalyst claims.
It accuses Lacavera, then the CEO of Wind, of sharing “intimate knowledge” of Catalyst’s negotiations and giving the consortium an unfair advantage. According to the statement of claim, Lacavera was aware that if Catalyst were the successful bidder it would fire him as CEO of Wind and axe his equity position in the company.
VimpelCom stalled on its negotiations with Catalyst, the firm claims, and ultimately sold Wind to the consortium after the exclusively agreement expired.
At the time, VimpelCom was trying to get rid of its stake in Wind, which was struggling to compete against Canada’s Big Three wireless players as a new entrant in Canada’s wireless market. Catalyst, which is headed by Newton Glassman, held approximately 30 per cent of senior debt of Mobilicity, Wind’s rival in the push to become the fourth national carrier. (Rogers Communications Inc. bought Mobilicity in 2015.)
This isn’t Catalyst’s first legal fight with West Face. It sued West Face for a chunk of Wind last year, claiming it landed the Wind deal using confidential information from a former employee who jumped ship to West Face.
West Face CEO Greg Boland denies Catalyst’s latest accusations.
“West Face conducted itself properly and lawfully at all times, and is strongly of the view that Catalyst’s latest claim is devoid of merit. West Face intends to defend the claim vigorously,” Boland said in an emailed statement.