UBS takes Microcell to court over alleged agreement with Inukshuk subsidiary

A company controlled by Unique Broadband Systems Inc. has taken Allstream Corp., Microcell Telecommunications Inc. and its two subsidiaries, Microcell Solutions Inc. and Inukshuk Internet Inc., to court for allegedly breaching conditions of an agreement that would have seen the three companies work together to provide broadband wireless access to Canadians. Unique Broadband Wireless Services Inc. (UBS) alleges that officers of Allstream and Microcell conspired to thwart joint venture discussions between Allstream, UBS and another U.S. company so that Allstream and Microcell could form their own joint venture excluding UBS. The suit, filed in the Ontario Superior Court of Justice on April 21, seeks $150 million in damages. Report on Wireless first reported earlier this year that legal action was likely the only solution to settle the ongoing dispute between Microcell and UBS over rights to a portion of Inukshuk’s multipoint communications services (MCS) spectrum (RoW, Jan. 27/04). The issue came to the fore late last year when Microcell and Allstream announced a joint venture with NR Communications (RoW, Dec. 3/03). UBS alleges that it has an agreement for the use of 36 MHz of Inukshuk’s 96 MHz of MCS spectrum. That agreement also gave UBS the right to match any offer for use of the remaining 60 MHz. Microcell refuses to acknowledge that any agreement between the two companies ever existed, despite its non-denial of a May 13 news release announcing the deal. In January, Phil Koven, a representative for Unique Broadband, told RoW that part of the agreement between UBS and Inukshuk covering use of the 36 MHz included a provision to match any offer to transfer the remaining 60 MHz to another party: "UBS does in fact have first right of refusal should the 60 MHz be transferred. So there’s obviously a difference of opinion on that." He added that the company has an agreement signed by André Tremblay, president and CEO of Microcell. Neither Microcell nor Allstream have issued any statements denying claims laid out by UBS in its lawsuit. Since legal action was contemplated as a possible avenue for resolving the dispute, Microcell has since completed a rights offering of nearly $100 million that also saw U.S. wireless industry veteran Craig McCaw agree to invest $50 million in the company (RoW Update, March 1/04). When contacted by RoW, Allstream stated: "From our opinion, (the lawsuit) is unfounded and we will defend against it." Microcell representatives did not return phone calls requesting comment following the filing of the lawsuit. UBS alleges that the Microcell/Allstream joint venture agreement is nearly identical to that proposed between Allstream and UBS. "The business objectives, structure and strategy of the announced joint venture arrangement are substantially identical to the joint venture arrangement negotiated between UBS and Allstream," reads paragraph 90 of the lawsuit. UBS also indicates that Allstream should be held accountable because it was privy to certain confidential information, as covered in a non-disclosure agreement (NDA) that precluded it from entering into an arrangement with any other parties without informing UBS."As a result of the NDA, common law duties of confidence and its fiduciary duties owed to UBS, Allstream was uniquely disabled, and prohibited by law, from entering into the joint venture agreement with Inukshuk or Microcell or any other party, to the exclusion of UBS," the lawsuit states at paragraph 100. Lawyers for UBS note that since Inukshuk didn’t disclose its proposed joint venture talks with Allstream involving the use of the MCS spectrum and refused to allow UBS to exercise its first right of first refusal on the spectrum, Inukshuk is in breach of the right of use agreement over the MCS spectrum.

UBS takes Microcell to court over alleged agreement with Inukshuk subsidiary

News | May 4, 2004

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