TORONTO – The drama continues at Look Communications after its board of directors and management resigned en masse late Tuesday. Former CEO Gerald McGoey and CFO Jason Redman also resigned on Wednesday without notice.
The announcement came moments after the now defunct company released its third quarter results which reported a net loss of $2.1 million for the period ended May 31, 2010. While cash, cash equivalents and short-term investments totalled $29.8 million, an increase of $15.5 million from the end of its fiscal 2009, the increase was primarily due to the sale of its spectrum and broadcast licence to Inukshuk Wireless Partnership last year.
As a result of the resignations, Unique Broadband Systems CEO Grant McCutcheon will serve as Look’s CEO and acting CFO until a replacement is found. McCutcheon will be joined by Robert Ulicki and Henry Eaton, all of whom are also board members of UBS, the parent company of Look.
"As directors of UBS, we feel duty bound to take the helm in such extraordinary circumstances on no notice and work for the interests of all Look shareholders", McCutcheon said Wednesday in a statement. "Although we are pleased to have a new board coming into place at Look without the time and costs associated with calling a special meeting of shareholders, we are surprised and disappointed by the manner in which it has occurred and the apparent taxing of shareholders by insiders for their self-interest.”
The statement also claimed that the company advanced $1.55 million to various law firms after May 31, 2010, described as “out of the ordinary course transfers” that were “exclusively for the personal benefit” of the former directors, officers and consultants of Look. While the full particulars are not yet known, “the rationale provided was that the funds were advanced in connection with the indemnification of these individuals”, the statement continued.
“The former Look board were told on numerous occasions by us and our legal counsel that they are trustees of Look’s cash pending its distribution to shareholders and, as such, not to make out of the ordinary course payments or distributions, yet it appears they went ahead and paid out substantial sums prior to abruptly resigning from the corporation”, McCutcheon added. “We have serious concerns about the former board and management’s conduct and intend to initiate a full review of their actions."
The company said that it will fill the two vacancies that now exist on the Look board “shortly with experienced and independent individuals”. It also continues in attempts sell off its remaining assets, consisting primarily of its cash and short-term investment position of approximately $30 million, approximately $360 million of tax attributes, and its Milton, ON facility and related infrastructure.
