Wind Mobile Ownership in Doubt

by Istvan Fekete on February 5, 2015

The ownership of Wind Mobile, Canada’s fourth-biggest wireless carrier, is in limbo, claims the Financial Post. It all began as an innocuous employment tiff between two high-profile Bay Street investment funds over Brandon Moyse, a junior investment analyst who joined West Face Capital last year after leaving Catalyst Capital Group.

In a motion filed with the Ontario Superior Court of Justice, Catalyst is seeking a declaration ordering West Face to set aside its ownership in Wind Mobile and hold it in trust for Catalyst, based on the claim that the Toronto-based private equity fund received and used confidential info from an ex-employee to purchase its stake in the carrier.

In addition, Catalyst is seeking to ban West Face from “participating in the management and/or strategic direction” of Wind Mobile, including taking part the upcoming federal spectrum auction scheduled for March 3. The hearing for Catalyst’s motion before an Ontario judge is set for March 19.

West Face was among the investors backing Globalive Capital, an investment firm led by Wind Mobile co-founder Anthony Lacavera, to take over VimpelCom’s stake in the country’s fourth-biggest carrier for $300 million last September.

Catalyst claims it had an exclusive negotiation period with VimpelCom, but as the filing reveals, the discussions failed. However, West Face was able to successfully negotiate a deal with a syndicated investment group that “waived any regulatory concerns”, Catalyst says.

“West Face could not have negotiated the deal it did with Wind without access to Catalyst’s confidential information, which was provided to it by Moyse,” the firm alleges in its court filings. In fact, Catalyst claims that not only did Mr. Moyse, who was primarily responsible for analyzing new investment opportunities from distressed situations, have access to confidential information about its plans for Wind — codenamed “Turbine” — it alleges West Face only began showing interest in the mobile carrier after the former Catalyst employee joined the firm.

What connects Moyse to the case? The former Catalyst employee allegedly walked away with critical information with the fund’s strategy in the Canadian wireless industry, especially its interest in taking of Wind. As a result, claims Catalyst, Moyse transferred Catalyst’s confidential information to West Face, who then distributed that confidential information throughout the firm,” Catalyst claims in its filing.

The case is just unfolding, so we’ll keep you posted.

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