Saturday, July 11, 1998
KWG asks court to mute Financial
Technology
By PAUL BAGNELL
Mining Reporter The Financial Post
KWG Resources Ltd. has asked a Quebec court to bar a would-be creditor from speaking to the
media about a dispute between the two companies.
The unusual application from KWG, a Montreal-based mineral exploration company headed by
promoter Pierre Gauthier, is the latest turn in a long-running fight between it and Financial
Technology Research Corp. of New York.
Financial Technology says it is owed $4.4 million from a deal it had with KWG to exercise options
to buy 250,000 shares of KWG in 1996 at $3.50 each - well below KWG's share price at the time.
It says Gauthier agreed to the deal when he signed an Oct. 13, 1993, memorandum outlining the
terms of the agreement.
KWG denies the claim and says Financial Technology did not deliver the investor relations services
it was hired to perform.
The application to the Quebec Superior Court by KWG, filed June 22, seeks "an order to lawyers
for Financial to cease immediately all false or deceptive representations or communications to the
media concerning the claim of Financial and the plan of arrangement with creditors."
The application cites three recent articles in The Financial Post, in which Leonard Seidman, a
lawyer representing Financial Technology, is quoted on the company's lawsuit against KWG.
Seidman's remarks, the KWG application says, were "aimed at obstructing KWG, its creditors and
shareholders."
The lawyer would not comment when reached Friday. Jacques Rossignol, KWG's lawyer, could
not be reached.
Court proceedings between the two sides have been postponed until mid-August.
After raising about $120 million in financings during 1996, KWG and its sister companies sought
creditor protection late last year. At the same time, they revealed millions of dollars of "unauthorized
borrowings" from affiliates.
On May 8, the Quebec Superior Court approved KWG's plan to restructure and pay creditors
with shares of KWG in place of the money they were owed. On April 30, creditors almost
unanimously approved the plan.
Financial Technology alleges KWG quietly went to court after the creditors meeting to gain the right
to reject some claims.
KWG's only significant asset is the Ametistovoe gold deposit in Russia, but the project's future is
uncertain.
On April 20, KWG said it had reached a deal with Astral Ltd. - which it has described only as "an
Irish company" - in which KWG gave Astral an 80% piece of Ametistovoe in exchange for 20% of
future mine profits.
The plan has since fallen through, work at the mine site has been halted and KWG says it is looking
for new financing for the project.
Shares of KWG trade without daily quotations on the over-the-counter Canadian Dealing
Network.
Late Friday, CDN said the most recent price available for the stock (KWGR/CDN) was
Thursday's close of 8› apiece.
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