UBS Concerned Shareholders File Information Circular And Urge Shareholders To
Vote Their YELLOW Proxy
/NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES/
The value of UBS has been destroyed while the UBS Board and Management have been richly rewarded
TORONTO, June 8 /CNW/ - Unique Broadband Systems, Inc. ("UBS" or the "Company") Concerned Shareholders announce the filing of an information circular that provides fellow shareholders with compelling reasons to vote out the incumbent Board of Directors and elect the Concerned Shareholders' Director Nominees. UBS shareholders are urged to vote their YELLOW proxies today, in advance of the Special Meeting of Shareholders to be held on July 5, 2010.
The UBS Concerned Shareholders are a group of mostly individuals who met in response to the publicity that has occurred surrounding the extraordinary $22.7 million of executive and director compensation paid in 2009 at UBS and LOOK in the face of dismal performance and plummeting share values. These shareholders have spent their time and resources over the past months to demand information, alert regulators, assess legal options, and ultimately take action in order to attempt to rectify and improve the situation on behalf of all shareholders of UBS.
Robert Ulicki, Grant McCutcheon and Henry Eaton, who beneficially own, control or direct 1,388,000 UBS common shares, are the UBS Concerned Shareholders' Director Nominees. These individuals would bring integrity, experience, and an Action Plan formulated solely to benefit shareholders to the Board. More information on each of the Concerned Shareholders' Director Nominees and the Action Plan is contained in the information circular.
BACKGROUND TO THE CONCERNED SHAREHOLDERS ACTION TAKEN ON BEHALF OF FELLOW SHAREHOLDERS
UBS is no longer an active business and its shares have plummeted over the past three years. Despite this, UBS and Look Communications Inc. ("Look"), UBS' de facto subsidiary, recently authorized the payment of "restructuring awards" to their executive officers and directors in the amount of $22.7 million.
Gerald T. McGoey, Chairman and Chief Executive Officer of UBS was awarded more compensation in 2009 than the total compensation received by each of the CEOs of BCE, BMO, CIBC, Encana and Telus!
This is not right. Long-suffering shareholders of UBS demand and deserve better. There is an alternative, but the UBS Concerned Shareholders need fellow shareholders to vote their YELLOW proxies FOR the removal of the incumbent Directors and FOR the election of the Concerned Shareholders' Director Nominees. The Information Circular, in its entirety, can be viewed at www.saveubs.com.
TOWN HALL MEETING WITH UBS CONCERNED SHAREHOLDER DIRECTOR NOMINEES
The UBS Concerned Shareholders invite fellow shareholders to attend a Town Hall Meeting to hear the Concerned Shareholders' Director Nominees' plan for UBS. The Meeting will take place at the offices of Gowling Lafleur Henderson LLP, 1 First Canadian Place, Suite 1600, 100 King Street West, Toronto on Thursday June 17, 2010 at 5:00 p.m. (Toronto Time). To attend in person, please rsvp at [email protected] or to join by phone, please register at https://secure.confertel.net/tsregister.asp?course=153206.
LETTER TO SHAREHOLDERS
The Concerned Shareholders' Information Circular mailing includes a letter to fellow shareholders from the Concerned Shareholders highlighting the value destruction at UBS and the excessive rewards the Board has approved. The text of the letter (dated June 3, 2010) follows:
June 3, 2010
Dear Fellow UBS Shareholders:
How much did YOU earn last year?
- In fiscal 2009, Unique Broadband Systems, Inc.'s ("UBS"), Chief
Executive Officer, Gerald T. McGoey, was awarded $8.3 million in
total compensation - more than the total compensation received by
each of the CEOs of CIBC, BMO, TELUS and BCE!
- Your current board of directors (the "Current Board") and top
three executives at UBS were awarded total compensation in 2009 in
excess of two times (2x) UBS' current market capitalization.
- Your remaining two "independent" members of the Current Board,
alone, were awarded an aggregate of $1,071,116 in total
compensation in 2009.
UBS is no longer an active business and its shares have plummeted over the past 3 years. Despite this, UBS and Look Communications Inc. ("Look"), UBS' de facto subsidiary, recently authorized the payment of "restructuring awards" to their executive officers and directors in the amount of $22.7 million.
THE NUMBERS TELL THE SORRY STORY
The Current Board and UBS management have:
- enriched themselves through payment of awards funded with
shareholders' cash; and
- approved non-arm's length arrangements, privileges and benefits to
ensure multi-year, multi-million dollar payments.
The Current Board took power on March 18, 2002. The chart below shows what dismal performance has been achieved for UBS shareholders while executive compensation rose at a staggering pace:
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UBS' 2001/2 2009/10 Value +/-
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Closing share price $0.47 $0.08 Minus 83%
March 18, 2002 May 25, 2010
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Cash per share(1) $0.56 $0.175 Minus 69%
August 31, February 28,
2001 2010
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Market Cap $48.3 million $8.2 million Minus 83%
March 18, 2002 May 25, 2010
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Cash compensation(2) $1,512,931 $16,267,816 Plus 975%
(UBS Executives and 2001 2009
Directors) fiscal year fiscal year
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THIS IS NOT RIGHT. LONG-SUFFERING SHAREHOLDERS OF UBS DEMAND AND DESERVE BETTER.
We are the UBS Concerned Shareholders (the "Concerned Shareholders") who have taken the drastic but necessary step of requisitioning a Special Meeting of UBS Shareholders. With your help, we will vote out the Current Board and replace it with a Board comprised of individuals who will act in the best interests of UBS shareholders and stop the Current Board and management of UBS from enriching themselves at the expense of shareholders.
INDEPENDENT THIRD PARTY HAS HIGHLIGHTED UBS GOVERNANCE ISSUES
RiskMetrics is a leading independent proxy advisory firm whose recommendations are relied on by leading institutional investor clients. In their advisory report to institutional subscribers of UBS, issued February 5, 2010, RiskMetrics recommended that:
"Withholding votes from the entire slate is warranted because McGoey is
standing as an insider on the Audit Committee and the non-majority
independent Compensation Committee."
While Mr. McGoey benefits from sitting on the committees responsible for overseeing UBS' performance and his own compensation, this activity is in stark contrast to governance best practices. It is particularly appalling given the high profile governance lapses of major companies over the last few years and the dire position that UBS and its shareholders have been put into by McGoey and his team.
There is more to the long, sad tale of value destruction and corporate governance issues, but as a shareholder, you're likely aware of some of what has transpired. You're surely aware of how these issues have manifested themselves in the devastating value destruction of your investment in UBS.
WE CAN'T CHANGE THE PAST, BUT WE CAN CREATE A BETTER FUTURE FOR UBS SHAREHOLDERS
The Concerned Shareholders' director nominees are committed to PRESERVING and RECOVERING where possible, shareholder value. With your support, once elected, your new directors will move swiftly to:
- Review all non-arm's length contracts, arrangements and transactions,
- Recover any improper compensation paid by UBS,
- Maximize the value of remaining assets,
- Preserve and protect cash and return it to shareholders as quickly
and effectively as can be accomplished, and
- Be transparent and above all else, listen to you, the shareholders.
More information regarding the qualifications of the Concerned Shareholders' nominees is contained in the Information Circular.
EVER WONDERED HOW TO JUSTIFY PAYMENTS LIKE THIS?
When asked at the most recent UBS shareholders' meeting to justify UBS' 2009 executive compensation, Gerald McGoey confirmed the following(3):
Q: Mr. McGoey you were paid over $8.0 million in 2009. Do you think your
services were worth that?
A: Absolutely I do!
Q: Look is all but wound-up and UBS has only three employees and no
operations; will your $570,000 salary and the $475,000 paid to the
Chief Technology Consultant be reduced?
A: No they will not!
Q: Will the cash from Look's asset sales or a sale of Look's shares be
distributed to UBS shareholders?
A: No. We will seek new opportunities for UBS!
$15 MILLION GOLDEN PARACHUTES
In their Management Circular, your Current Board suggests that their removal from the Corporation will result in a breach of an existing services agreement entered into by UBS and give rise to termination rights under the agreement. This assertion is followed by a summary of a web of purported agreements with various parties. After adding up the numerous additional payments the reader is supposed to conclude that if the Concerned Shareholders are successful, UBS will be on the hook for an approximate total of $15.8 million in golden parachute payments to executives. There are a number of problems with this assertion:
1. The recently filed Management Circular is the first time that
shareholders have been informed of many material elements and the
quantum of these purported termination rights. This is material
information and if this risk existed prior to its recent disclosure,
your Current Board has even more questions to answer.
2. The current market capitalization of UBS is approximately $8.2
million, as of market close June 2, 2010. The purported termination
rights of $15.8 million are outlandish, albeit consistent with the
Current Board's actions since seizing control of your company in
2002.
3. The timing of this disclosure seems highly coincidental, given the
current threat to your Current Board's survival. It's almost like
shareholders are meant to be intimidated by this. You should not be!
The UBS Concerned Shareholders are not intimidated by these high-handed tactics and intend to pursue all means, including legal avenues to rectify this situation. If shareholders weren't sure where your Current Board's interests laid before, it should be crystal clear now.
DON'T TAKE THIS LYING DOWN. THERE IS AN ALTERNATIVE, BUT WE NEED YOUR HELP
Your Current Board and UBS management believe (or would have you believe) that an $8.3 million compensation package is acceptable for a CEO who had presided over an 83% drop in share value. The time for change is now or never.
Please take the time to read the accompanying UBS Concerned Shareholders Information Circular dated June 3, 2010. The Concerned Shareholders are proposing a new slate of directors with experience and integrity. Your New Board will do what is needed to take stock of your company and make all changes necessary to return to the shareholders what value can be recovered; to maximize the remaining value in the company and to return value to the shareholders as quickly and effectively as can be done.
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We know there are many of you who feel the same way that we do. What we
need now is for this support to manifest itself in proxy votes for the
Concerned Shareholders' nominees. Vote your YELLOW proxy FOR the removal
of the incumbent Directors and FOR the election of the Concerned
Shareholders' nominees. Time is short, so don't delay. Please don't
hesitate to contact Kingsdale Shareholder Services Inc., toll free at 1-
866-879-7650 if you have any questions or require assistance in voting
your shares.
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Sincerely,
CLARESTE WEALTH MANAGEMENT INC.
"Robert Ulicki"
Robert Ulicki, CFA
President
On behalf of the other Concerned Shareholders named in the accompanying
Information Circular.
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1. Calculated by dividing cash and cash equivalents on the balance sheet
at the period end by the shares reported outstanding at period end in
the financial statements.
2. Includes salary, restructuring awards, management fees, service fees,
director fees and other cash payments from management information
circulars dated February 12, 2002 and January 19, 2010. 2009 fiscal
year includes payments by Look and UBS and excludes $465,000 of
restructuring awards not accepted by Peter Minaki, a former UBS
director, as reported in the Financial Post.
3. Based on the Concerned Shareholders' notes from the meeting.
UBS CONCERNED SHAREHOLDERS RESPOND TO MANAGEMENT CLAIMS
In their Management Information Circular, the incumbent Board make a number of incredulous claims why they should be re-elected. We believe that many of these claims are more examples of the incumbent Board's high-handed approach to shareholders while others, in our opinion, are without merit. The following are UBS Concerned Shareholders' responses to your Current Board's "reasons" not to support us:
1. A New Board Could Trigger $15.8 Million in Golden Parachutes
In a shocking revelation, your Current Board decided to disclose in the UBS Management Information Circular, for the first time, the details and quantum of certain payment provisions in the Service Agreements with Gerald McGoey and Alex Dolgonos. In particular, there are "Company Default Provisions" in Gerald McGoey's Service Agreement that allow him to terminate the Agreement if, among other things, he is not elected to the Board or retained as CEO. Apparently, the Company Default Provisions have been in force at the time of every annual meeting since 2006 despite the absence of disclosure. Only now are we told that if Mr. McGoey is not elected as a director at the Meeting that he will be entitled to a $8.6 million payment as a result of such a "Company Default." This is in addition to the $8.0 million of "restructuring awards" already awarded to him by the Current Board! Further, following a change-of-control of UBS (which includes his termination), Alex Dolgonos is entitled to a $7.2 million payment - in addition to the $5.9 million in "restructuring awards" already awarded to him by the Current Board - if there is a change in the business relationship. Simply put, we believe that the Service Agreements represent the attempt to entrench management and, in our view, is evidence that your Current Board does not believe in shareholder democracy. The failure to disclose the quantum and details of golden parachutes of this magnitude until now is of great concern to us.
We are not persuaded by your Current Board's claims that electing a New Board will provide a legitimate basis for actually paying any of the change-of-control payments to Gerald McGoey and Alex Dolgonos. Our legal counsel has requested copies of the Service Agreements to review the change-of-control and other termination provisions. As a result of our requests for disclosure, UBS filed the Service Agreements on SEDAR, confirming, what we expected, that these are material contracts that ought to have been previously publicly filed. We continue to review these agreements and invite shareholders to do the same. In the meantime, our legal counsel has put each of the directors of the Current Board on notice as follows:
... the Service Agreements and any termination payments purporting to be
made thereunder which are triggered by the results of a vote of the
shareholders at a duly called and properly held meeting, would, in our
view, be improper payments and the receipt of such payments would be in
breach of the fiduciary duties owed by the recipients to UBS. Further,
any advance arrangements or commitments to pay these funds will give rise
to liability on the part of the directors. Moreover, any action taken by
others within the UBS, including members of the Board, to aid or
facilitate in the making of such payments, would be undertaken knowing
that such actions were to aid, assist and abet improper payments. Any
persons providing such knowing assistance will be pursued for recovery of
the payments.
We are strongly of the view that if a member of the Current Board, including an independent director, approves such a payment, such individual would expose himself to significant personal liability at the hands of UBS' Canadian, US and international shareholders, as well as governing regulatory authorities.
2. Your Current Board Has Maximized Value for Shareholders
Your Current Board has in fact presided over an 83% drop in the price of UBS common shares since taking power. We estimate that UBS sold most of its operations and assets in 2003 for nearly zero value. The investment in Look has been a failure, in our opinion, with Look ending up a failed business and entering into a disappointing sale of its principal asset - the wireless spectrum.
3. Your Current Board Has Secured Cash Flow for UBS Through Services
Provided to Look Communications Inc. ("Look")
Amazingly, your Current Board wants to be congratulated for securing cash flow from the Management Services Agreement with Look. The reality is that the Current Board has completely strained UBS' cash flow and financial condition with dubious awards and contractual commitments. Shareholders need to ask themselves, how did your Current Board improve UBS' financial condition when it:
- agreed to pay $5.25 million in "restructuring awards" in 2009?
- chose not to realize a possible $3+ million economic benefit by
redeeming its Look Debentures for cash rather than Look shares?
- approved the Service Agreements which can pay out another $15.8
million in change-of-control/termination payments?
4. Your Current Board was Recently Elected
True. However, your Current Board created a state of facts that has forced us to call a Special Meeting within only a few months after the February 24, 2010 meeting. In particular, we were left with no alternative as a result of the Current Board's failure to fully and plainly disclose the details of "restructuring awards" until the date it filed the January 19, 2010 Management Information Circular. The February 24, 2010 Shareholder Meeting was the first opportunity for shareholders to ask management and your Current Board to explain and justify the $22.7 million of "restructuring awards." It was partly a result of the bombastic responses to the shareholder questions by Gerald McGoey that the Concerned Shareholders concluded that a shareholder group needed to be formed to requisition a meeting and replace the Current Board. Had your Current Board disclosed the "restructuring awards" at the time when they were approved, as your Current Board was required to do, shareholders such as ourselves may have been in a position to replace your Current Board at the last meeting.
5. If the "Restructuring Awards" are Challenged, Expensive and Protracted
Litigation Will Delay and Reduce the Amount of Look's Available Cash
We continue to be amazed at how high-handed your Current Board is towards its shareholders. Your current Board is warning shareholders that if they challenge the $22.7 million of "restructuring awards," there will likely be expensive and protracted litigation involving UBS and Look which will delay the payout of cash by Look. This attitude towards shareholders is why we need a New Board at UBS! A New Board will be free from the conflicts of interest that will allow it to investigate, review and assess the validity of the payment of the so-called "restructuring awards."
6. The Concerned Shareholders Seek Control of UBS for No Consideration
or Payment to UBS Shareholders
Not true. The Concerned Shareholders are a mostly a grass roots collection of individuals with modest ownership in UBS. There is no current intention to acquire control of UBS by the Concerned Shareholders.
7. The Concerned Shareholders Have Not Disclosed a Business Plan for UBS
The action plan for the New Board is disclosed in the UBS Concerned Shareholders' Information Circular under the heading "The New Board's Action Plan For UBS." Unlike your Current Board, the New Board intends to listen to shareholders. To that end, the New Board has announced a town hall meeting to explain their action plan and receive feedback from shareholders prior to the Special Meeting.
8. Strong and Experienced Board of Directors
We are not impressed with the Current Board's "strength and experience" as board members, including their corporate governance practices. We believe that there have been systemic conflicts of interest at the Boards of UBS and Look and ongoing, material disclosure omissions by the Current Board.
The New Board has the right mix of industry, finance and legal experience to serve UBS shareholders well and without conflict of interest.
9. The Concerned Shareholders' Proposal May Result in the Disruption of
Look
UBS has three remaining employees and Look is being wound-up by its current management. There is no reason to think that any changes initiated by the New Board would have any greater "disruption" on such employees given the state of these companies.
10. The Concerned Shareholders Have Not Acted in a Transparent Manner
We disagree. Details of the Concerned Shareholders and the Concerned Shareholders' Nominees are included in our Information Circular. The Concerned Shareholders' Nominees want to hear from you! The New Board has announced a town hall meeting to explain their action plan and receive feedback from shareholders prior to the Meeting.
Fellow shareholders are encouraged to visit www.saveubs.com for further information related to the town hall, Special Meeting and how to support much needed change at UBS.
About the Special Meeting
The Special Meeting of Shareholders of UBS is scheduled to be held at 9:00 a.m. (Toronto Time) on Monday, July 5, 2010 at 8250 Lawson Road, Milton, Ontario, L9T 5C6, the principal and registered office of UBS.
Proxy Voting Deadline
Shareholders are reminded to not delay and vote the YELLOW proxy form so that it can be received no later than 5:00 p.m. (Toronto Time) on Tuesday, June 29, 2010. Detailed voting instructions are included in the Concerned Shareholders' Information Circular that is being distributed to UBS shareholders.
Further information about voting the YELLOW proxy is available from Kingsdale Shareholder Services at 1-866-879-7650.
Forward-Looking Statements and Information Contained Herein
Unless otherwise noted, the information concerning UBS, Look Communications Inc. ("Look") and their directors and officers contained in this press release has been taken from, or is based upon or derived from, publicly available documents or records on file with Canadian securities regulatory authorities and other public sources. Although, the Concerned Shareholders have no knowledge that would indicate that any statements contained in such publicly filed documents are untrue or incomplete, the Concerned Shareholders do not assume responsibility for the accuracy or completeness of such information or for any failure by UBS or Look to disclose material information which may affect the significance or accuracy of such information.
Certain statements contained in this press release constitute forward-looking statements. The words "may", "would", "could", "will", "intend", "plan", "anticipate", "believe", "estimate", "expect" and similar expressions as they relate to the Concerned Shareholders, the Concerned Shareholders' nominees, UBS or Look, are intended to identify forward-looking statements. Such statements reflect the Concerned Shareholders' current views with respect to future events and are subject to certain risks, uncertainties and assumptions. The Concerned Shareholders' nominees assume no responsibility for any such statements. Many factors could cause actual results, performance or achievements that may be expressed or implied by such forward-looking statements to vary from those described herein should one or more of these risks or uncertainties materialize. Such factors include, but are not limited to, the financial condition and cash flow of UBS and Look, binding contractual covenants entered into by UBS and/or Look, pending or future litigation involving UBS and/or Look, general market conditions, the market for and regulations surrounding the purchase and sale of tax losses and other general business, technological, competitive and regulatory factors. Neither the Concerned Shareholders nor their director nominees assume any obligation to update or revise the forward looking statements contained in this press release to reflect actual events or new circumstances.
For further information: Investors, www.saveubs.com, Kingsdale Shareholder Services Inc., 1-866-879-7650; Media, Joel Shaffer, Kingsdale Communications Inc., (416) 867-2327
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