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Private Closes 'Disruptive Chapter,' Settles With Consipio

Private Closes 'Disruptive Chapter,' Settles With Consipio
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Jan 7, 2013 12:30 PM PST    Text size: 

LAS VEGAS — Private Media Group has entered into a settlement agreement with Consipio Holding BV that effectively gives 60 percent voting-rights power to the investor-led group.

Private Media Group's settlement deal puts to rest two legal claims in New York and Nevada over unpaid promissory notes and allegations of mismanagement by a number of company board directors and former CEO Berth Milton.

The agreement, announced Friday, is monumental for Barcelona-based Private Media Group, putting behind a turbulent era and bringing a vote of confidence from Consipio investors, who now will have the ability to elect a majority of the members of the company's board of directors.

“We are delighted to have closed a disruptive chapter in Private’s colorful history," Private Media Group CEO Charles Prast told XBIZ. "The settlement with our European creditors will ensure that our focus can once again return to our core competency, the production and distribution of world-class, must-see adult entertainment under the iconic Private brand.”  

Private Media Group on Dec. 28 filed papers in Nevada to  authorize a new series of preferred stock, issuing 800,000 shares valued at €10 each of newly authorized Series B Preferred Stock to Consipio.  

Prast said that Consipio agreed to take a discount in the amount owed to them and convert settlement equity into preferred stock that later can be changed over into common stock at its discretion.

The Consipio settlement valued at €8 million, or $10.6 million, mollifies several claims against the company, including  the default of a $4 million note.

The loan, pledged with Private Media Group stock held by Slingsby Enterprises Ltd., a company helmed by former CEO Milton, was subject to an order of attachment in New York for the sum of $7.35 million.

The Consipio agreement also settles and reimburses for litigation fees and costs in the New York and Nevada actions, as well as repay a €1.75 million obligation owed by Private Media Group-owned division Fraserside Holdings Ltd. to Bocca BV, a subsidiary of Consipio.

Private Media Group also said that it settled with another investor-led group, Tisbury, which also was involved in the Nevada proxy battle. The company was earlier ordered by a Nevada court to reimburse Tisbury for $450,000 in litigation costs.

To satisfy the order, Private Media Group agreed to pay Tisbury, in lieu of cash, 3 million shares of common stock and an option contingent on outstanding share volume to purchase up to 4 million shares at 25 cents a share.

Private Media Group's stock price traded Monday at 20 cents a share on over-the-counter markets, down 50 percent from closing price on Friday.

Prast said that its stock price rose up to 150 percent on Friday, though it went down, and he doesn't see a "cause and effect" between the settlement and the stock price.

In both Consipio's and Tisbury's settlement deals, Private Media Group noted that the mutual general agreements did not release from liability Milton, as well as board directors Bo Rodebrandt, Johan Gillborg, Hans Christian Anderson and Jan Jensen, as well as attorney Samuel Guzik.   

The long-running legal saga waged by Consipio and other shareholders was ordered dismissed in May by Clark County Judge Elizabeth Gonzalez in Nevada.

After 19 months of litigation, Private Media Group changed its front office and board of directors and divested itself of its Sureflix and GameLink divisions. Both those companies were released to their original ownerships as part of separate settlement agreements.

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