Calgary-based Cybersurf Corp. – already facing a showdown with dissident shareholders at its annual meeting this – was slammed last Tuesday with a hostile takeover bid from a local rival.

Globel Direct Inc., a national marketing services firm headquartered in Calgary, announced it wants to buy a 100-per-cent stake of Cybersurf in what it calls a beneficial move for both companies. Globel is offering Cybersurf shareholders one-third of a Globel common share for each Cybersurf common share.

Globel employs about 350 people in Calgary, Edmonton, Vancouver and Toronto in the areas of production, administration, programming, IS, marketing and sales. The company says a merger with Cybersurf will position the new company to become a communications leader offering a wide range of services in both the traditional and online sectors.

Cybersurf's board of directors and its six shareholders are due to square off today (Dec. 19) in Toronto over Cybersurf’s 3web division. The dissident shareholders want to see the company dump the money-losing free Internet access service, a proposal rejected Dec. 8 by the board.

The dissident shareholders are bidding to oust Cybersurf’s directors because of Cybersurf’s financial performance. For the three-month period ended Sept. 30, Cybersurf reported a net loss of $3.1 million (nine cents a share) on revenues of $1 million. This compares to a loss of just over $1 million the previous year.

This follows a net loss of $8,589,389 on revenue of $2,509,366 for the year ended June 30, 2000. This compares to net earnings of $153,689 on revenues of $3,911,699 for the previous year.

In a separate news release recently, the dissident shareholders cite the difficulties other companies with similar free ISP models have had in maintaining market value and avoiding failure. They want the company to focus instead on interactive media development and custom software development.

But on Monday last week, the war of words heated up when Cybersurf claimed that a press release sent out earlier had not been endorsed or issued by the company. “It is unfortunate that shareholders have been subjected to these kinds of tactics at a time when their investment decisions must be made based on full and fair disclosure,” said Paul Mercia, Cybersurf president and CEO.

Mercia followed up with another news release the next day that said Cybersurf has received a strong show of support from its largest shareholders, with the exception of former chief executive and board member William Hammet. "Personally, I am elated with the overwhelming vote of confidence the company has received," Mercia said.

"Although . . . the actions taken by the dissidents are disappointing, I am pleased that as a result of their actions we immediately have received the support of our largest shareholders, which represents a resounding endorsement of our company."

Several hours later, Globel issued an announcement about its takeover bid. Trading in the two companies was halted last Tuesday on the Canadian Venture Exchange, with Cybersurf's value steady at 49 cents per share and Globel up two cents to 92 cents.

Earlier this month, Cybersurf reported that its 3web Internet access service signed ad contracts in excess of $1.35 million during November. These contracts represent almost double 3web’s revenue from the entire fiscal year ended June 2000, the company said.

Launched in August 1998, 3web is Canada’s largest free Internet and email service provider. It has more than 500,000 users in 21 major centres across Canada, including Calgary.

Globel Direct offers a range of products and services including data processing/management, direct mail production, Web-enabled call centre solutions, electronic bill and document processing and other services.

Web Watch:
www.dissidentnews.com
www.cybersurf.net
www.globel.ca