Mobilicity caught up in funding legal battle

by Andrew Roach on March 12, 2013

It has certainly been a tough time for some of the country’s independent wireless providers with many firms struggling to breakthrough into the mainstream market.

Now, Toronto based carrier Mobilicity has got caught up in a financial dispute with an investment firm who are looking to cut funding to the wireless company.

Catalyst Capital Group has launched a legal case against Mobilicity to try and cancel an agreement between the two companies which would give the independent wireless firm funds of up to $75 million.

Mobilicity has been trying to make an impact on the wireless scene for the last 5 years but like many of their rivals, has struggled to compete many of the larger and well established wireless firms.

The injunction launched by Catalyst Capital is set to pose a major threat to the wireless company who are also known as Data & Audio Visual Wireless, as it could cancel $75 million work of funds that was initially agreed between the two parties.

However, the investors are looking to pull out as they believe that the deal harms the interests of senior investors within the company.

With Mobilicity already having used $15m since the deal was announced back in February, any withdrawal of funding could have a significant impact on the future of the Vaughan-based company.

Like many wireless companies, Mobilicity has amassed quite a bit of funding in the forms of bonds with over $215 million sold in 2011.

However, any additional funding needed to be approved by the company’s creditors and this approval has proven to be a major concern for Catalyst who owned numerous bonds that belong to Mobilicity.

The wireless firm has maintained that the case won’t have any impact on the current status of the company. In a statement, the firm said that “Mobilicity is focused on the service it provides its customers and was very pleased earlier this month to have closed a financing with investors familiar with the company.”

“The financing will be used to assist with the company’s continuing operational plans,” they added.

Whilst it may not affect the company in the long haul, the legal action is a worrying sign for Mobilicity’s long term future as the clouds once again draw in once again on Canada’s independent wireless companies.

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