Crypto Board Opposes Aziz's Call for EGM

19 February 2009
After nearly three months of public push and shove between Javaid Aziz and the board of directors at CryptoLogic Ltd., the board Thursday was highly critical of Mr. Aziz's request for an extraordinary general meeting for shareholders.

In an e-mail to CryptoLogic's directors Wednesday -- part of a filing with the United States Securities and Exchange Commission -- Mr. Aziz was again on the offensive, lambasting management because under their watch, CryptoLogic "continues to make losses and hemorrhage cash," he said.

Mr. Aziz said that the board should consider his EGM request -- and the resolutions to be discussed at the meeting -- independent of any legal advice from Stikeman Keeley Spiegel Pasternak, which serves as outside counsel to the company.

CryptoLogic's chairman, Robert K. Stikeman, is a partner at that firm, which Mr. Aziz argues presents a conflict of interest for CryptoLogic.

Mr. Aziz, now, is demanding a seat on the board -- a seat currently occupied by Wai Ming Yap, who has been a board member since June 2007. He is also demanding that Mr. Stikeman resign and be replaced by a director who is "independent and unrelated to the company."

"The Board, including the Chairman and CEO, are in place only to serve the shareholders at their pleasure, and to look after their interests," said Mr. Aziz, who maintains a 12.5 percent shareholding. "They do not own the business and have no right(s) to stay in place if the shareholders desire otherwise."

The board has 21 days to reply, though its reaction Thursday indicated in no uncertain terms that it regards Mr. Aziz's actions as disruptive to its ongoing growth and restructuring initiatives.

"CryptoLogic is already executing on a new growth strategy and a major restructuring plan to return to profitability and cash generation," the company told IGamingNews Thursday through Argyle Communications, its public relations firm in North America.

"This strategy was implemented well before Mr. Aziz bought shares in the company in December 2008 and demanded board room representation," it continued. "That with an AGM due shortly, the petition for an EGM is therefore ill-timed, costly, disruptive and detrimental to the long term interests of shareholders. The Board will inform the shareholders of its opposition, in the appropriate manner, in due course."

As part of its restructuring program, the company last week dropped the chief technology officer's role from its senior management structure. It has also reduced employee headcount, though the exact number of cuts remains unknown.

Chris Krafcik is the editor of IGamingNews. He lives in St. Louis, Mo.