Look seals cash and equipment deals for high-speed push
Unique Broadband invests $5 million
By Wojtek Dabrowski
canadian press
Unique Broadband Systems Inc. is pumping about $5 million into Look Communications Inc. in a move that will help Look target the high-speed Internet access market in underserved areas of Ontario and Quebec.
Look, a wireless digital TV and Internet services company that restructured to survive last year, announced yesterday that Unique had bought 2.3 million of its shares — about 9 per cent of the company — in a private placement valued at nearly $1.4 million.
In addition, Unique is investing $3.6 million into Look in return for a debenture that can be converted into common shares after a year. When converted, Unique would own slightly more than seven million Look shares or about 23 per cent of the Toronto company.
In a related move, Look also said it will buy $2.4 million worth of Unique's high-speed technology to expand its existing network for high-speed Internet access.
The deal is slated to close early next month.
Look chairman Michael Cytrynbaum said in an interview that yesterday's deals will give his company cash and equipment to help execute its business plan of providing high-speed Internet access to small- and medium-sized businesses in small towns as well as rural and underserved areas of Ontario and Quebec.
Cytrynbaum said that until now, customers in those underserved areas simply couldn't get affordable high-speed Internet access because of a lack of infrastructure.
"They just don't get access," he said. "That's the beauty of it — there's no competition."
The only solution available to those companies was to get more expensive technologies to match traditional modes of connection, he said.
But as Look enters the market, "there will be people who recognize they have the need and would like to fulfil the need, and those are the people that we will obviously address first," he said.
"Once they are addressed, you go in and explain the advantages of high-speed connectivity" to customers who may be considering getting the service, he added.
Cytrynbaum didn't rule out a merger between Look and Unique Broadband, but said any such deal is still far off.
Gerald McGoey, Unique's chief executive, said yesterday's deal will benefit both companies.
"This segment of the (business) market in particular is dramatically underserved by existing service providers and represents a significant opportunity for both companies."
Mark Quigley, research director at Yankee Group Canada, said the cash Look is getting from Unique is important for the company, which like many telecom services companies faces a crunch in raising capital in traditional financing markets.
"The injection of cash is certainly helpful, particularly in the environment we find ourselves in today, where going to any kind of financial market to grab funding is proving to be challenging to say the very least," Quigley said.
However, he cautioned that some of Look's potential customers will still need to be persuaded that they need the company's services, and this process of "high-touch, consultative sales" could prove costly.
This is offset by the fact that little or no competition exists in many of the areas that Look plans to target with Unique's technology.
Shares of Look closed down 2 cents to 75 cents on the Toronto stock market yesterday, while Unique ended up 3 cents to 24 cents.
Unique Broadband invests $5 million
By Wojtek Dabrowski
canadian press
Unique Broadband Systems Inc. is pumping about $5 million into Look Communications Inc. in a move that will help Look target the high-speed Internet access market in underserved areas of Ontario and Quebec.
Look, a wireless digital TV and Internet services company that restructured to survive last year, announced yesterday that Unique had bought 2.3 million of its shares — about 9 per cent of the company — in a private placement valued at nearly $1.4 million.
In addition, Unique is investing $3.6 million into Look in return for a debenture that can be converted into common shares after a year. When converted, Unique would own slightly more than seven million Look shares or about 23 per cent of the Toronto company.
In a related move, Look also said it will buy $2.4 million worth of Unique's high-speed technology to expand its existing network for high-speed Internet access.
The deal is slated to close early next month.
Look chairman Michael Cytrynbaum said in an interview that yesterday's deals will give his company cash and equipment to help execute its business plan of providing high-speed Internet access to small- and medium-sized businesses in small towns as well as rural and underserved areas of Ontario and Quebec.
Cytrynbaum said that until now, customers in those underserved areas simply couldn't get affordable high-speed Internet access because of a lack of infrastructure.
"They just don't get access," he said. "That's the beauty of it — there's no competition."
The only solution available to those companies was to get more expensive technologies to match traditional modes of connection, he said.
But as Look enters the market, "there will be people who recognize they have the need and would like to fulfil the need, and those are the people that we will obviously address first," he said.
"Once they are addressed, you go in and explain the advantages of high-speed connectivity" to customers who may be considering getting the service, he added.
Cytrynbaum didn't rule out a merger between Look and Unique Broadband, but said any such deal is still far off.
Gerald McGoey, Unique's chief executive, said yesterday's deal will benefit both companies.
"This segment of the (business) market in particular is dramatically underserved by existing service providers and represents a significant opportunity for both companies."
Mark Quigley, research director at Yankee Group Canada, said the cash Look is getting from Unique is important for the company, which like many telecom services companies faces a crunch in raising capital in traditional financing markets.
"The injection of cash is certainly helpful, particularly in the environment we find ourselves in today, where going to any kind of financial market to grab funding is proving to be challenging to say the very least," Quigley said.
However, he cautioned that some of Look's potential customers will still need to be persuaded that they need the company's services, and this process of "high-touch, consultative sales" could prove costly.
This is offset by the fact that little or no competition exists in many of the areas that Look plans to target with Unique's technology.
Shares of Look closed down 2 cents to 75 cents on the Toronto stock market yesterday, while Unique ended up 3 cents to 24 cents.
