What started as a spitting match between two confident Bay Street men, over an analyst hire of all things, is flowing out into streets.
On Sept. 24, Newton Glassman, the loquacious leader of Catalyst Capital Group, privately e-mailed some prominent Bay Street figures, including the heads of GMP Capital and Canaccord Genuity as well as analysts who cover Callidus Capital Corp., to invite them to an "open discussion" with West Face Capital and "any and all Callidus detractors" to debate the company's future.
Callidus is a specialty lender backed by Catalyst that went public in April, 2014. Despite lending money to companies that can't obtain financing from traditional financial institutions, filling what it describes as an "important gap in the lending markets," the company's shares have struggled, falling 19 per cent since the initial public offering.
Mr. Glassman believes that West Face has something to do with that, worried that leader Greg Boland has been sullying Callidus's name when talking to the Bay Street community. Frustrated, he proposed that a debate should happen "NEXT WK" because he wants to "limit detractors' ability to spin/manipulate the forum."
Mr. Boland was not copied on the e-mail, nor was he ever contacted directly by Catalyst about it, but he caught wind of the request. On Friday, he accepted it.
"West Face has no interest in the success or otherwise of Callidus since our holdings of Callidus are immaterial," Mr. Boland said in a statement. "But if Mr. Glassman is truly serious about this, I think it would be an interesting and potentially beneficial idea."
That's a nice way of saying: Bring it on. Given the brewing animosity between the two men, any debate could erupt in fireworks.
The fuse for this was lit more than a year ago when West Face hired a low-level employee from Catalyst in May, 2014. To outsiders, the move seemed rather innocuous. Behind the scenes, Mr. Glassman was furious. So he sued.
Both Catalyst and West Face have been prominent players in the fight for control of two Canadian wireless companies, Wind Mobile and Mobilicity, and Catalyst alleged that the employee it lost provided critical information about its strategy and operations to West Face.
Early on, it looked as though there would be a simple solution. A judge ruled that the analyst could not start working at West Face until Dec. 22, 2014 – six months after he left Catalyst – for non-compete reasons.
That wasn't enough for Mr. Glassman, who ratcheted up the legal battle.
Showing no mercy, Catalyst filed a new motion that asked for an injunction to prevent West Face from "participating in the management and/or strategic direction of Wind Mobile" and from participating in the federal spectrum auction that took place in early 2015.
The motion centres on West Face's participation in the acquisition of Wind Mobile, which was announced in September, 2014. In the filing, Catalyst notes that it originally had an exclusivity agreement with Wind, but the talks ultimately fell through. "Within days," West Face and its partners negotiated the purchase of Wind.
"West Face could not have negotiated the deal … without access to Catalyst's confidential information" that was provided by the analyst, Catalyst alleged in court filings.
If only it ended there. Catalyst came back and launched a separate defamation suit against West Face. Mr. Glassman, it seems, is convinced that Mr. Boland is out to sink Callidus, alleging that he is on a campaign to tarnish the company.
West Face declined to provide additional comment and said Friday's statement speaks for itself.
The major wrinkles in the plan are the two outstanding lawsuits between Catalyst and West Face. To get around them, Mr. Boland said his participation "would require a general litigation release."
On Friday afternoon Mr. Glassman replied, saying the condition "would breach Callidus' duty to its shareholders."
So, no easy exit from the lawsuits. But should Mr. Boland still be interested, Mr. Glassman said he will do the debate and personally donate $250,000 to charity just to make it happen.
As for who could host, Mr. Glassman originally suggested someone from the media, and even cited The Globe and Mail. Mr. Boland countered with a "mutually agreeable respected professional legal adjudicator, such as a retired judge or a senior Toronto litigator."
I didn't go to law school, but should anyone need me, I'm all-in.