Private equity fund Catalyst Capital Group Inc. is suing the former owners and bankers of Wind Mobile Corp. for $750-million, alleging that leaks of confidential data and breach of an exclusivity agreement cost Catalyst a lucrative opportunity to buy the mobile phone company in 2014.
In an Ontario Superior Court of Justice filing on Tuesday in Toronto, the firm alleged that it recently learned Wind's former owners, VimpelCom Ltd. and Globalive Capital Inc., Wind's investment bank, UBS Securities Canada Inc., and a consortium of eight private equity funds and investors, including West Face Capital Inc., conspired against Catalyst.
The lawsuit, which has not been heard in court, states that during the spring and summer of 2014, when Wind was up for sale after defaulting on debts, Catalyst negotiated exclusive rights to buy the company. Multiple bidders were circling Wind at the time, and Catalyst alleges that confidential information on its bid was leaked to a rival consortium of private equity funds that included West Face.
This consortium ultimately acquired Wind in September, 2014, in partnership with former Wind chief executive officer Anthony Lacavera. The new owners paid about $135-million for control of Wind and assumed its debts. The consortium of private equity funds subsequently struck a deal to sell Wind to Shaw Communications Inc. for $1.6-billion in December. The deal closed in early March. Catalyst alleges the private equity funds earned $750-million on the transaction, "thereby crystallizing Catalyst's damages."
Catalyst claimed it only learned of leaks and breach of exclusivity agreements in recent court filings made by Shaw and Wind's former owners in order to close the transaction.
In response to the lawsuit, West Face CEO Greg Boland said: "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." UBS Securities Canada, which was hired by VimpelCom to find a purchaser for the Amsterdam-based company's interests in Wind Mobile, declined comment.
The lawsuit takes direct aim at Mr. Lacavera, Wind's former CEO, who Catalyst states would have been terminated if its offer was successful. The lawsuit states: "Lacavera repeatedly communicated confidential information to the consortium … to assist the conspirators in their efforts to prevent Catalyst from successfully purchasing Wind."
Mr. Lacavera declined to comment on the allegations Wednesday and also offered no comment on behalf of Globalive, an investment firm he owns with his business partners. Mr. Lacavera stepped down as Wind's CEO in late 2014, but remained the company's chairman until March, 2015. A representative for VimpelCom could not be reached for comment.
The lawsuit is the latest in a series of legal battles between Catalyst and two central players in the Wind transaction, West Face and Shaw.