Latest and Greatest news... what a squabble..
Attention Business/Entertainment Editors:
Dion Entertainment Corp. - Recent News Release of Border Capital Corp.
SURREY, BC, Oct. 1 /CNW/ - Dion Entertainment Corp. (TSE:DIO) - Mr. Leo
Dion, President of Dion Entertainment Corp. (``Dion Entertainment'), wishes
to respond to the news release of Border Capital Corp. (``Border') of
September 30, 1999 (``Border's Release'), both on his own behalf and on
behalf of Dion Entertainment. Border's Release makes a number of statements
about certain patents (the ``BingoNet Patents') and about the activities of
Dion Entertainment that are either inaccurate or misleading. For the most part
Border's Release deals with matters that are the subject of recently commenced
arbitration and it is the view of Mr. Leo Dion that that is the appropriate
forum for the discussion of same. However, in view of the inflammatory news
release, Mr. Dion feels compelled to comment.
Border's Release begins by suggesting that a recent application for an
injunction against Border and its related parties has prevented it from
closing any financing to complete its previously announced plan to acquire
BingoNet Inc.. For the record, no injunction is being sought to prevent Border
from completing that acquisition and the pleadings in the action, which are a
matter of public record, may be reviewed by anyone wishing to confirm this.
The injunction is being sought to restrain Border from dealing unilaterally
with the BingoNet Patents, which is a separate matter.
To appreciate the distinction, it should be understood that BingoNet Inc.
no longer owns the BingoNet Patents but holds a royalty and reversionary
interest with respect to them. In fact, the BingoNet Patents have been owned
for some years by IBC Investments (``IBC'), which holds them in trust for six
beneficiaries, two of whom are related to Mr. Dion and Dion Entertainment.
Under the terms of the trust IBC cannot effect significant transactions
involving the BingoNet Patents without the approval of five of the six
beneficiaries. It was also agreed among the parties that the shares of IBC,
which were originally held by a company owned by Mr. Greg Durreault, were to
be transferred to a professional trustee.
In 1997 IBC, acting on behalf of the beneficiaries, entered into the
patent venture agreement referred to in Border's Release. This agreement
creates a joint venture (the ``Patent Venture') between Border and IBC to
exploit the BingoNet Patents in North America. The agreement stipulates that
the operations of the Patent Venture are to be governed by a management
committee consisting of four persons, two of whom were to be appointed by
Border and two of whom were to be Mr. Dion and his nominee.
From the outset, Border and its representatives have attempted to conduct
what Mr. Dion and others view as Patent Venture business without reference to
the management committee. Based upon the clear language of the Patent Venture
Agreement, it has always been the Dion position that Border is without
authority to do so and it has always been the Dion position that Border's only
connection to the BingoNet Patents was its interest in the Patent Venture.
There have been numerous attempts to settle these differences, the last
of which was the settlement agreement referred to in Border's Release.
However, they have all failed leaving the parties to seek an arbitrated
settlement of the disputes, which arbitration was recently initiated by Mr.
Dion and related parties. As an interim matter pending the resolution of the
arbitration, Mr. Dion and those other parties have sought the above mentioned
injunction merely to require Border to maintain the status quo, namely the IBC
trust, the Patent Venture and the management committee, all as provided in the
agreements and declarations giving rise to same.
The parties seeking the injunction (the parties do not include Dion
Entertainment but are related to it) have felt the need to apply for the
interim injunction to protect their interests because of recent actions taking
by Border with respect thereto, namely its attempt to, unilaterally or in
conjunction with IBC, abolish the management committee, because the
announcement by Border that it would be indirectly acquiring the shares of IBC
acquiring the shares of Greg Dureault's company, which as indicated above were
to be transferred to a professional trustee not Border, and because of recent
representations by Border, both in its news releases and to third parties,
that it controls the BingoNet Patents worldwide.
It should be noted that Border as only one of the parties to the Patent
Venture cannot unilaterally alter its terms and IBC cannot assist it to do so
without the approval of five of the six beneficiaries, which approval was
never given. Further, it is the Dion position that the BingoNet Patents are
controlled in North America by the management committee and outside of North
America by IBC.
In the most recent settlement attempt, all parties involved agreed to
transfer the ownership of the BingoNet Patents to Border provided that, among
other things, Border completed the acquisition of BingoNet Inc. and granted to
a Dion related party the master licence referred to in Border's Release.
Contrary to Border's Release neither the settlement agreement nor any other
document involved placed any financial commitment upon Mr. Dion, Dion
Entertainment or any party related to them. It is true that the settlement
expired in part because of a failure to agree upon the terms of the master
licence. However, it must be pointed out that a draft of that licence was
prepared by counsel for Mr. Dion and submitted to Border, but each time a
request was made to Border to consider or comment on the draft its management
refused to do so or to provide an alternative form of licence.
Border's Release also suggests that certain projects being developed by
Dion Entertainment in the area of tv bingo may infringe the BingoNet Patents
or may somehow be the property of Border. First, it should be noted that a tv
bingo may be conducted in several ways, some of which may be effected by the
BingoNet Patents and some of which will not. To date Dion Entertainment has
not disclosed sufficient details of its plans to allow anyone to draw a
conclusion one way or the other and the comments of Border in this regard are
reckless speculation intended to create uncertainty among present and
potential shareholders and investors of Dion Entertainment.
As for Border having some interest in the operations and projects of Dion
Entertainment, nothing could be further from the truth. Dion Entertainment was
in the bingo business long before Border was even incorporated and was
involved in tv bingo prior to the Patent Venture or IBC's acquisition of the
BingoNet Patents. Dion Entertainment owes no duty to Border or the Patent
Venture and is not subject to any applicable non-competition covenant.
Dion Entertainment wishes to make it clear that, although these disputes
have been time consuming for some members of management, they are not now and
never have been any impediment to the company's business operations and
projects under development, including the ongoing negotiations with television
networks. As always, Dion Entertainment continues to pursue its goal to be the
largest and most diversified bingo entertainment company in the world.
-0- 10/01/1999 |
