Copyright Law

GGF Investors Abandon Pirate Bay Deal

By soulxtc

Cites “turbulence in the media,” admits some of its claims were bogus, which it blames on the “increased workload and extreme urgency” in finalizing the deal, and disciplinary committee convenes to discuss delisting its stock.

It’s D-Day for Global Gaming Factory’s acquisition of the Pirate Bay and the deal looks even shakier than ever.

First GG announced that a number of the investors funding the deal had decided to back out of the deal “because of serious concerns following the recent turbulence in the media.”

By “turbulence” I think its referring to the fact that copyright holders are lining up to take advantage of the Pirate Bay’s guilty verdict to get it shutdown for good regardless of any plans to turn it into a legal online media store.

It also doesn’t help any that Swedish authorities are investigating possible insider trading over a suspicious share price spike that occurred nearly one week prior to the announcement of the deal to purchase the Swedish BitTorrent tracker site.

Add to that several high profile resignations, claims of back taxes owed by GGF CEO Hans Pandeya himself, and the fact that technical partners haven’t seen a dime and you have a surefire recipe for disaster that would certainly scare off most investors.

AktieTorget, the stock market where it?s traded, suspended trading of GGF last Friday until it could prove financing for the Pirate Bay purchase is in place, and today it’s no closer to lifting that order.

In fact, it added a number of criticisms including GGF’s lack of written documentation proving that informal bids for the Pirate Bay were made by Napster co-founder John Fanning and an unspecified Russian company back in late July.

Wayne Rosso, the former Grokster CEO who had been brought in to negotiate deals with the entertainment industry and who quit GGF amid “very strong doubts? over sufficient funding to acquire the Pirate Bay, was alleged to be the broker between it and Napster, a claim which he categorically denies.

“Hans’ assertions are categorically false,” Rosso told me in a brief e-mail exchange this morning. “I was never the conduit of any bid of any kind from anyone. I have absolutely no knowledge of any so called bid from John Fanning whether formal or informal, real or unreal.”

GGF claims Rosso forwarded a bid from Fanning on July 24th.

“Now if Hans has claimed that he got a bid from the Easter Bunny, I’d be more inclined to believe it. The whole affair is a massive cluster fuck. I’m glad I got out when I did. There’s just no way this dog will hunt,” he adds.

Pandeya alluded to Rosso’s denials in a press release this morning, yet doesn’t offer a credible explanation as to why Rosso would lie about having received a bid when he has nothing to gain one way or the other, especially when even Fanning himslef denies the claim.

“Another serious allegation has been made against the company for the veracity of the company’s press releases, and has been shown to be completely false,” says Pandeya. “However, the accusation might undermine GGF’s leadership and cause more key defections which in turn create greater concern among investors.”

GGF admits that it was a mistake to send out some press releases before it had a chance to verify the claims, and blamed the “increased workload and extreme urgency” it felt in finalizing the deal. However, it doesn’t specify which were unsubstantiated.

He says charges about the “veracity of GGF’s disclosure” policies is what has “caused the defection of key personnel” and therefore “created a very strong concern among investors.”

AktieTorget also questioned why GGF claimed that it was in “final negotiations with a global player” without telling people about the significant financing needs an agreement would require.

As such it has decided to continue the suspension of GGF stock and to in fact convene the Disciplinary Committee to determine if it should even remain listed on the exchange.

“After a meeting with the company on August 26th AktieTorget has concluded that the company can not be considered to have the capability to inform shareholders in a correct, relevant and reliable manner,” it says in a press release.

To his credit pandeya still insists all is well and that he’s prepared to inject capital for the completion of the acquisition “if needed due to unforeseen circumstances.”

In fact, has put up his 150 million shares in GGF as a security deposit to guarantee the deal goes through.

Well see what happens after the shareholders meeting scheduled for today.

Stay tuned.

jared@zeropaid.com

Full post as published by ZeroPaid on August 27, 2009 (boomark / email).