Thursday, November 17, 2005

Lawsuit Launched Against BCE and Teleglobe Directors

The Plan Administrator of Teleglobe filed a lawsuit against BCE and seven former directors of Teleglobe. The plaintiff is seeking a declaration that the former directors breached their fiduciary duty to Teleglobe Inc. and failed to act in accordance with the standard of care prescribed under the Canada Business Corporations Act. The plaintiff is seeking compensation for oppression in the amount of $3 billion and damages for breach of fiduciary duty in the amount of $3 billion, in each case plus interest and costs.

Teleglobe at a subsidiary of BCE at the time of the alleged breach.

  • In July 2005, India's Videsh Sanchar Nigam Limited (VSNL) agreed to acquire Teleglobe International in a deal valued at $239 million. VSNL, which is part of India's $17 billion Tata Group, has a strong pan-India domestic Long Distance network. It is also a leading player in the Corporate Data Market in India, offering Frame relay, ATM and MPLS based IP-VPN services. VSNL also acquired the Tyco Global Network (TGN).

  • In August 2004, Teleglobe acquired ITXC, the largest provider of international VoIP wholesale services with direct relationships with carriers in more than 175 countries.

  • In June 2003, Teleglobe was relaunched as a provider of international voice, wireless roaming, data and Internet services following a corporate restructuring under which TLGB Acquisition LLC, an affiliate of Cerberus Capital Management and TenX Capital Partners, gained control of the company. Since its emergence from bankruptcy, Teleglobe has had positive net cash flows.

  • In May 2002, Teleglobe filed bankruptcy papers with the Ontario Superior Court.

  • On April 24, BCE (Bell Canada Enterprises), Canada's largest communications company, announced that it would cease long-term funding of Teleglobe.

See also