Information Technology Reference
In-Depth Information
Finally, with total disregard for shareholders with high blood
pressure, he shared his deepest concern that the guarantors'
possible preparation for a complete takeover of
MCM
would
have potentially negative implications for many current
MCM
shareholders. According to Kutt, he was advised on earlier oc-
casions by Robertson of the guarantors' concern over the finan-
cial position of
MCM
:
It has been intimated to me that the guarantors may at-
tempt to induce the [Toronto Dominion] bank to call its
loan. I have been told by Mr. Robertson that in such event
the guarantors might under their guarantee redeem the
loan (thereby acquiring the right to the security granted to
the bank for the repayment of the loan) and that in such
event the guarantors might form another company to pur-
chase the Company's assets and undertaking in satisfac-
tion of the Company's bank indebtedness.
In such an event, neither Kutt nor any other shareholder would
acquire any interest in the new company, except to the extent
granted by the new company. “I am most alarmed to learn,”
continued Kutt, “that Mr. Robertson has just resigned as a dir-
ector of the Company and that Borden & Elliot have just re-
signed as the solicitors for the Company, both citing potential
conflicts of interest.”
In the letter, Kutt proposed a plan for raising additional
funds. “[During the shareholders' meeting,] I intend to propose
that all of the shareholders of the Company provide additional
financing to the Company by way of a secured loan … As an in-
terim measure I have indicated to the Company that I would be
prepared to advance on the same basis up to $50,000.” Through
the October layoffs and other cost reduction measures,
MCM
's
operating expenses were reduced to approximately $23,000 per
month. Kutt concluded that “the $50,000 financing which I'm
