Here is the article from the Ottawa Citizen website:
Thursday 12 March 1998
Alphacell chief guilty of securities offences
RES still confident that deal will go ahead
Andrew McIntosh
The Ottawa Citizen
A Montreal businessman whose company last month signed a proposed $28.75-million financing deal with Ottawa software company RES International Inc. was convicted in Quebec Court yesterday of 91 securities offences.
Robert Roy, president of Alphacell Technologies Inc., was found guilty of illegally helping sell Quebec investors research and development tax-shelter investments in 1992 without the proper license or prospectuses.
A sentencing hearing for Mr. Roy, who is facing minimum fines exceeding $450,000, has been set for March 23. His father, Constantin Roy, was also convicted of 91 counts and faces an equal sum in terms of fines.
The judgments were handed down by Quebec Justice Jean-Pierre Bonin following charges laid in 1996 by the Quebec Securities Commission.
Mr. Roy refused comment about his conviction and the impact it might have on his RES deal.
RES president Rolf Schliewen said he had not heard about the judgment, but said the deal with Alphacell will proceed if the company proves it has the cash. "This is bad for Mr. Roy, but we are continuing our due diligence to see if Alphacell has any assets," he said. "The due diligence was never finished. We always said the deal was subject to due diligence, regulators' approval and shareholders' votes."
RES shareholders are slated to vote April 17 on the deal with Alphacell, but Mr. Schliewen said the meeting could either be delayed or the results of the due diligence on the deal might not be available to be published in the information circular describing the financing by the time it is mailed to shareholders.
On Feb. 9, RES said it had agreed to issue 57.5 million RES shares to Alphacell. In exchange, RES said Alphacell agreed to give RES a portfolio of what RES described as "long-term U.S. Treasury bills and strip bonds" with a market value of $28.75 million Cdn.
RES said it would use the new money for business expansion, new ventures and to pay down debts.
Asked whether he has seen the securities that Alphacell claims to have since the deal was announced, Mr. Schliewen said he had not. "We have a legal document -- it's called a deed of assignment -- and we are checking in fact if that document gives us access to the securities. The securities are held in the U.S. depository, and we are checking these things," he said.
The shares of RES trade on the Canadian Dealers Network (CDN), the over-the-counter bulletin board exchange run by the Toronto Stock Exchange.
Since the proposed financing was announced, the Ottawa company announced it was taking over a Montreal retail software company called Mitech Systems Ltd. in a multimillion-dollar deal.
Mr. Schliewen said if the Alphacell financing falls apart after the due diligence is completed, RES has unspecified "alternative investment funds available."
"The Mitech deal will continue to go forward," he said. "Obviously, both parties would prefer that the money were available without any hassles or difficulty and that Mr. Roy was not having legal problems," he added.
Alphacell, Mr. Roy and his father are also named as defendants in a class-action lawsuit filed in Quebec Court in 1995.
More than 2,000 investors claim that the Roys and others sold them or helped sell them illegal, misleading and fraudulent investments.
The Roys have denied any wrongdoing and are fighting the lawsuit, but they have offered to settle the dispute out of court by claiming it had mining properties and securities that they have never proved existed.
RES shares closed down a penny at 13 cents on the CDN yesterday.
Copyright 1998 The Ottawa Citizen |
