Skeena shareholder answers lawsuit, makes accusations
Ticker Symbol: C:SKE
Skeena shareholder answers lawsuit, makes accusations
Skeena Resources Ltd (2) (C:SKE)
Shares Issued 163,375,428
Last Close 3/12/2015 $0.07
Friday March 13 2015 - Street Wire
by Mike Caswell
Eilat Exploration Ltd., a private entity facing a lawsuit in the Supreme Court of British Columbia from Skeena Resources Ltd., has responded to the suit by denying any wrongdoing and making several accusations against the company's chief executive officer, Walter Coles Jr. Eilat claims that Mr. Coles confessed that management had manipulated Skeena's price ahead of its transaction with Eilat. It also complains about threatening and intimidating communications from Skeena.
The statements by Eilat come in response to a lawsuit that Skeena filed at the Vancouver courthouse on Feb. 17, 2015. The suit appeared to be somewhat mundane, stemming from a share transaction Eilat made with a European bank. Skeena said that Eilat, which received 64 million of the company's shares in a property deal, had violated the terms of an agreement that restricted the stock. The agreement essentially required that Skeena's chairman, Ron Netolitzky, hold the stock and vote it on behalf of Eilat for a period of time. In violation of that agreement, Eilat pledged 6.4 million shares to a European bank, Skeena claimed. The lawsuit sought an injunction that would require Eilat to deliver the shares to Mr. Netolitzky.
The arrangement, however, was more complex than that, according to Eilat. In a response filed on Wednesday, March 11, Eilat explains at some length how it was misled, threatened, intimidated and otherwise mistreated by Skeena. The response, which Eilat filed without the benefit of a lawyer, contends that Skeena's lawsuit is "vexatious and without proper legal basis."
Eilat traces its troubles with Skeena to 2011, when it held a gold project in B.C. called Spectrum. Mr. Netolitzky was trying to put the project into a public company. The way this would occur, as described by Eilat, changed several times. At first Mr. Netolitzky was trying to take Eilat public, but then he kept stalling on the deal, blaming lawyers for incompetence and later saying that market conditions were not favourable for an initial public offering. As Eilat sees it, all this talk was "misleading and deceptive business conduct" which led it to suffer a loss of opportunity. (Although Eilat says its dealings were at least partly with Mr. Netolitzky, it also says he was acting on behalf of a private entity called Keewatin Consultants (2002) Inc.)
Eventually Eilat entered into an agreement in which it granted an option on the property to Skeena. As part of the deal Eilat was to receive $12-million worth of stock, according to the response. Keewatin, which held a 20-per-cent interest in the Spectrum project, was to receive shares as well.
Eilat's description of the deal to this point indicates it was troublesome, but it says other difficulties followed. At some point Mr. Netolitzky had introduced Eilat to a Skeena's CEO, Mr. Coles. For reasons not explained in the lawsuit, Eilat had a conversation with Mr. Coles about Skeena's share price. According to the response, he confessed that Skeena's management had hired a Toronto brokerage named Latimer & Co. to manipulate the stock ahead of the deal with Eilat.
The response does not explain the significance of that allegation, but according to Eilat even more difficulty followed. On Nov. 4, 2014, Skeena and Keewatin demanded that Eilat's shares be issued in Mr. Netolitzky's name. "This was done by a series of somewhat intimidating letters," the response explains. According to Eilat, it "stood its ground" and demanded that the shares be issued in its name, and not that of Mr. Netolitzky. The escrow agent obliged. Eilat says it was perfectly within its rights to subsequently pledge the stock to a European bank.
Eilat further complains about a share transaction with Mr. Cole that it says amounted to an elaborate tax evasion scheme. In September, 2014, he had asked Eilat to transfer 5 per cent of its Skeena shares to himself, as payment for some sort of work, the response states. He explained that the transaction would be done with Eilat loaning him money to buy the stock at a very low price to overcome tax issues. As Eilat sees it, this amounted to a scheme that violated taxation rules in the United States and Canada.
For those reasons, Eilat asks that the lawsuit be dismissed. The case is not yet set for trial.
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