6th Jun 2016 08:02
LONDON (Alliance News) - PCG Entertainment PLC on Monday said it has sought legal opinion over a dispute it is in with a supplier, but that its strategy for the remainder of 2016 remains on track.
Last week, the Asia-Pacific online gaming and media company revealed that it was in a dispute with a supplier over a debt repayment due to be paid to the supplier by Kolarmy Technology Inc.
Kolarmy is the former major shareholder of Center Point Development Corp, which PCG bought in 2015. The acquisition agreement between PCG and CPDC provided that CPDC's debtor, creditor and cash balances at that date would remain with Kolarmy post-acquisition except for USD69,100 in cash and creditors of USD19,100.
In addition, PCG, Kolarmy and CPDC's principal supplier entered into an agreement whereby CPDC was released from its obligations in connection with a debt to the supplier of USD2.7 million and all the supplier's rights against CPDC in respect of the debt were cancelled, as Kolarmy agreed to assume all of the obligations and liabilities owed in connection with the debt.
Last week, PCG revealed that Kolarmy had not repaid the debt, resulting in a dispute between PCG and the supplier, the latter which is now seeking repayment from PCG.
PCG warned that this could "materially affect" its trading and financial position going forward.
It also warned on another dispute it is in, with a principal customer over previously-agreed trading terms, which has resulted in the customer withholding USD1.2 million due to PCG.
On Monday, PCG provided an update on both situations detailing that it has sought legal opinion and has been reassured that the supplier debt assignment letter is "unequivocal" and the contracts in place with the customer clearly state the trading terms agreed and that they cannot be "unilaterally altered".
"We believe we are in a very strong position to defend both the assignment letter and the contract. We believe that we will reach a negotiated settlement without recourse to legal action, but either way we hope to resolve these matters in the near future. PCGE's strategy for the remainder of 2016 and onwards remains on track," Chief Executive Nick Bryant said in a statement.
PCG added that it is in discussions with a number of media companies regarding distribution deals which it hopes to close in the coming months. These include a snooker series distributed by a "major satellite network" in China, a reality TV motor racing show and a horse racing tipping service both also in China.
Shares in PCG were trading down 2.8% at 0.510 pence on Monday morning.
By Karolina Kaminska; [email protected] @KarolinaAllNews
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