BARCELONA — Private Media Group has agreed to give up its GameLink division as part of a settlement deal with former Private CEO Ilan Bunimovitz and a number of investors.
With the settlement announced Wednesday, Private Media Group has transferred all of the outstanding stock in GameLink's operating parent companies ThinkForward Inc. and GreenCine Inc. to Bunimovitz, as well as investing shareholders Andrew Sullivan and Peter Marinac.
Private Media Group also will issue nearly 1.8 million shares of company stock to Bunimovitz, Sullivan and Marinac, who controlled GameLink before it was acquired by Private three years ago.
Concurrently, Bunimovitz has given up his board seat with Private Media Group but will recoup unpaid amounts owed to him under his employment agreement. That amount was not specified.
Bunimovitz was fired in 2010 as CEO of the company by now-ousted CEO Berth Milton.
Private Media Group said that as part of the agreement all intercompany receivables and payables between GameLink and Private were waived and cancelled, and each contract or agreement between Private and GameLink were terminated without compensation with the exception of the GameLink deal to manage PrivateVOD.com.
With today's announcement, Private Media Group also said that it is re-evaluating the company's prior expansion of its operations outside of its historical European sphere of operations and the expansion of its product offerings.
"The company’s board of directors has determined that the disposition of the GameLink group in California is consistent with these goals," the company said.
The deal revealed today culminates several years of wrangling in Nevada courts between Consipio Holding BV investors and Private.
Plaintiff shareholders had claimed the company had been rocked by embezzlement, among other charges, from moves made by Milton and former directors. In the end, the company changed its front office and board of directors.
And just yesterday Private Media Group filed papers asserting the adult entertainment company would reimburse Consipio Holding BV and Tisbury Services Inc. shareholders for their attorneys fees and costs incurred "in an amount to be agreed between the plaintiffs and the company and approved by the company’s board of directors."
Private Media Group CEO Charles Prast told XBIZ Wednesday evening that the 2009 GameLink acquisition was a mistake for the Barcelona-based adult entertainment company.
"As part of strategy to combat declining revenues in its core European business, [Private] embarked on a series of poorly executed and under-funded North American acquisitions in the VOD space," Prast said. "Unfortunately, these businesses, while excellent stand-alone companies, were incompatible with Private’s core assets, competencies and geographical focus. In addition, the expectations of the sellers of these companies, including binding legal engagements by Private’s former board and management, were not met.
"The result was an almost lethal combination of misrepresentation, mismanagement, lack of promised operating capital and negative synergies for Private," he said.
Prast noted Private's divestiture of GameLink is the first step in returning focus to its core assets.
"All things considered, we consider ourselves fortunate to be able to divest this business, which suffered under Private’s stewardship without having to pay more significant damages.
"We are very pleased with the core team at Private and look forward to a renewed focus on our European business, which is performing beyond our initial expectations.”
Bunimovitz did not immediately respond to XBIZ for comment on today's announcement.
