The ASX has cast doubt on Uniti Wireless’s ‘candour’ about the events leading up to sacking its Adelaide co-founders

The ASX has questioned the truthfulness of Uniti Wireless’s version of events leading to the sacking of its co-founders and questioned why investors were kept in the dark.

Uniti Wireless co-founders, Che Metcalfe and Sasha Baranikov.

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The ASX has questioned the truthfulness of Uniti Wireless’s version of events leading to the sacking of its co-founders and questioned why the move was not communicated to investors before the company listed on the market.

Adelaide-based Uniti sacked co-founders Che Metcalfe and Sasha Baranikov the day after listing on the ASX on Wednesday, February 13, and announced the decision to the ASX on the Friday.

But it later came to light that their sacking was considered, but not disclosed, before the listing.

In an eight-page list of questions and answers posted to the ASX today, the ASX says, in relation to the company’s assertion that the chief executive, Michael Simmons, came up with a rationalisation program which necessitated their sacking over the course of two days, that it “questions the candour of this response”.

“If the CEO had developed a rationalisation program as at 12 February 2019 and the termination of Mr Metcalfe and Ms Baranikov was part of that program, it seems reasonable to assume that the CEO was contemplating the potential termination of employment of Mr Metcalfe and Ms Baranikov prior to 12 February 2019,’’ the ASX said in a question to Uniti.

“Please advise when the CEO first considered the potential termination of employment of Mr Metcalfe and Ms Baranikov.’’

Uniti is sticking to its story, saying the reason the decision-making process was so rapid was because Mr Simmons only got full access to FuzeNet, the company acquired with funds raised through the initial public offer of shares, on February 11.

“The CEO developed the first elements of his rationalisation program prior to the completion of the FuzeNet acquisition including IP transit and backhaul contract renegotiations and in relation to rebranding, however decisions in relation to specific employees were made on and after 12 February 2019 following the completion of the acquisition of FuzeNet on 11 February 2019.

“These staffing elements were only able to be developed at this time as the CEO only gained unrestricted and complete access to the FuzeNet business - and most importantly in this context to its staff reporting to Mr Picton and Mr Seaman (the outgoing senior executives) - on the morning of 11 February 2019 once the acquisition had been completed.’’

Late in the letter it states that it then became apparent that the functions under Mr Metcalfe’s role as chief technology officer “could also be included in the CEO’s role, working with existing FuzeNet staff, in a manner which would realise operational and cost efficiencies.

“This only became apparent to the CEO over the course of 11 February 2019 and 12 February 2019.’’

The company said “the CEO’s rationalisation program is not documented in any written or electronic format.

“Due to rationalisation being a dynamic process, a specific program has not been documented.’’

The company said it did not feel the need to tell investors about the decision before the listing, because it wasn’t finalised before the listing.

“Neither the CEO nor the chairman considered that it was appropriate on 12 February or immediately prior to UWL’s listing to disclose the proposed termination,’’ Uniti says.

“This is because, at that time, the CEO’s proposal had not yet been agreed to or approved by the board of UWL.

“At that time the CEO was not approved to proceed with any termination of employment.

“As such, any supplementary disclosure prior to listing might have been misleading if the board had ultimately determined not to proceed with any termination of employment.

“In any event, once Mr Metcalfe and Ms Baranikov were notified of the terminations, UWL disclosed this to the market.’’

The company said in the letter that a cost reduction program had been flagged in the prospectus.

The company sacked the cofounders, who were each on a base salary of $200,000. This week it announced the hiring of executive director Vaughan Bowen on a $200,000 package plus up to $300,000 in incentives per year, to lead a merger and acquisition strategy.

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