Options deal leads to case against former Videotron chieftain
MONTREAL — Canuck media giant Quebecor and its wholly owned cable subsidiary Videotron are suing former Videotron CEO Claude Chagnon for C$23.2 million ($14.7 million).
In its lawsuit, Quebecor alleges that Chagnon profited from insider trading by taking a lucrative options deal as part of his compensation package just before Rogers Communications began its attempt to acquire Videotron two years ago.
Quebecor alleges that Chagnon had privileged information about the looming takeover when he accepted the compensation package.
In a statement, Chagnon rejected the Quebecor allegations, saying, “They are groundless and come more than two years after the fact.”
Prior to the Quebecor lawsuit, the Quebec Securities Commission was already looking into the incident.
Chagnon accepted his compensation package on Jan. 19, 2000. Toronto-based Rogers’ bid to acquire Videotron was officially announced on Jan. 25, 2000, but the Quebecor suit alleges that execs at Videotron were already in serious talks with Rogers as early as Jan. 10, 2000, before Chagnon inked the deal for his compensation package.
In the package, Chagnon took 1.2 million Videotron stock options at $16.47 a share. Rogers offered $26.61 per share in its formal bid for the company on Feb. 7, 2000. (Quebecor eventually acquired Videotron after a hostile battle with Rogers for control of the Montreal cable company, Canada’s third-largest cable operator.) The suit alleges that Chagnon made an illegal profit of $14.7 million, the difference between the share price paid by Quebecor and the share price in his compensation package.
Quebecor is also embroiled in another legal dispute, this one with BCE-owned Bell Globemedia. Quebecor said Thursday that it will ignore an order from federal broadcast regulator the Canadian Radio-Television and Telecommunications Commission (CRTC) to pay back millions of dollars to Bell Globemedia.
Quebecor execs maintain the company cannot pay Bell because the two companies are in court. Quebecor is suing Bell-owned sports channel RDS over payment disagreements. Videotron has been withholding millions of dollars in payments to RDS because Quebecor alleges that Bell is giving unfair advantage to its own satellite service, Bell Expressvu, allowing it to pay less for Bell-owned nets like RDS.