Court Asked to Toss FriendFinder Acquisition Suit

gonzo · 03-11-2009

LOS ANGELES — Penthouse attorneys are once again seeking dismissal of a case brought on by Broadstream Capital Partners, which alleged it breached a joint venture deal over the purchase of adult and social-networking giant FriendFinder when it was known as Various.

It is the second time Penthouse has asked for a dismissal in the case, which has been amended four times.

Broadstream alleged that Penthouse execs committed breach of contract and fraud when Penthouse purchased FriendFinder properties in a cash-and-stock deal for $500 million in December 2007.

In the suit, Broadstream claims that during the bidding process for the FriendFinder properties, Penthouse contacted Various company officials to put in a separate bid from a bid it was working on with Broadstream, which said it was working on a joint venture with Penthouse.

Three months ago, Penthouse changed its name to FriendFinder Networks, which now includes Penthouse magazine, AdultFriendFinder.com, 25 other social-networking sites and additional adult-business properties.

Penthouse attorneys now are asking a federal judge to toss the suit, charging that Broadstream induced 20 third parties to sign a three-page document that it described as a nondisclosure agreement, but which also contained a noncompete provision.

Once a party signed the nondisclosure agreement, Penthouse attorneys argue, Broadstream intended to extort exorbitant fees and compensation if it ultimately decided to participate in the acquisition of Various.

They also claim that Broadstream falsely claimed that it was a merchant bank “with significant experience investing in the adult entertainment industry.”

“Ignoring its obligations under the Various nondisclosure agreement, Broadstream wrongfully used Various’ information to market itself as a ‘fundless sponsor’ and engaged in a widespread campaign to ‘lock up’ potential bidders for Various, eliminating competion,” the filing said.

The motion for summary judgment, which will be heard at U.S. District Court in Los Angeles in early April, includes a number of declarations, including one from Daniel Stanton, the former Penthouse chairman who now chairs FriendFinder.

It also includes testimony from “Legendary” Lars Mapstead, who was a Various co-owner and now acts as an executive consultant for FriendFinder.

Mapstead said he was concerned with a Broadstream acquisition because the company “had no true investment, and thus no risk should the deal not prove successful.”

“Ultimately, Various decided not to participate in an acquisition involving Broadstream for a number of reasons,” he said. “We learned that Broadstream misrepresented the nature of its business. Broadstream lacked sufficient experience with managing adult entertainment companies or understanding of the regulations that govern such businesses.
“Broadstream did not have sufficient experience relating to initial public offerings. Neither Broadstream’s nor its sharholders’ assets were going to be used to finance any acquisition of Various by Broadstream.”

Ultimately, Mapstead said, Various considered Penthouse to be a much more viable purchase candidate than Broadstream.
Attorneys for Broadstream Capital could not be reached by post time.

http://www.xbiz.com/news/105807

RawAlex · 03-11-2009

"Broadstream lacked sufficient experience with managing adult entertainment companies or understanding of the regulations that govern such businesses."

Exactly how long have the guys in charge of Penthouse been running it?

gonzo · 03-11-2009

Quote:

Originally Posted by RawAlex

"Broadstream lacked sufficient experience with managing adult entertainment companies or understanding of the regulations that govern such businesses."

Exactly how long have the guys in charge of Penthouse been running it?

They have a LEGENDARY Executive Consultant!

RawAlex · 03-11-2009

Haha... I think the key phrase is "no true investment". I think that is a nice way of saying that Andrew and Lars weren't going to get a dump truck load of cash at their front door day 1, probably just a bigger part of a future IPO or similar. Penthouse (according to what I could understand of their IPO filing) appears to have given the AFF owners a sizable amount of money up front to make this deal go.

But hey, what do I know?

03-11-2009	#1
gonzo Fat Fucking Nobody Want to see your own Advertising Here! Join Date: Apr 2003 Location: Atlanta,Ga. Posts: 17,795 Blog Entries: 11	Court Asked to Toss FriendFinder Acquisition Suit LOS ANGELES — Penthouse attorneys are once again seeking dismissal of a case brought on by Broadstream Capital Partners, which alleged it breached a joint venture deal over the purchase of adult and social-networking giant FriendFinder when it was known as Various. It is the second time Penthouse has asked for a dismissal in the case, which has been amended four times. Broadstream alleged that Penthouse execs committed breach of contract and fraud when Penthouse purchased FriendFinder properties in a cash-and-stock deal for $500 million in December 2007. In the suit, Broadstream claims that during the bidding process for the FriendFinder properties, Penthouse contacted Various company officials to put in a separate bid from a bid it was working on with Broadstream, which said it was working on a joint venture with Penthouse. Three months ago, Penthouse changed its name to FriendFinder Networks, which now includes Penthouse magazine, AdultFriendFinder.com, 25 other social-networking sites and additional adult-business properties. Penthouse attorneys now are asking a federal judge to toss the suit, charging that Broadstream induced 20 third parties to sign a three-page document that it described as a nondisclosure agreement, but which also contained a noncompete provision. Once a party signed the nondisclosure agreement, Penthouse attorneys argue, Broadstream intended to extort exorbitant fees and compensation if it ultimately decided to participate in the acquisition of Various. They also claim that Broadstream falsely claimed that it was a merchant bank “with significant experience investing in the adult entertainment industry.” “Ignoring its obligations under the Various nondisclosure agreement, Broadstream wrongfully used Various’ information to market itself as a ‘fundless sponsor’ and engaged in a widespread campaign to ‘lock up’ potential bidders for Various, eliminating competion,” the filing said. The motion for summary judgment, which will be heard at U.S. District Court in Los Angeles in early April, includes a number of declarations, including one from Daniel Stanton, the former Penthouse chairman who now chairs FriendFinder. It also includes testimony from “Legendary” Lars Mapstead, who was a Various co-owner and now acts as an executive consultant for FriendFinder. Mapstead said he was concerned with a Broadstream acquisition because the company “had no true investment, and thus no risk should the deal not prove successful.” “Ultimately, Various decided not to participate in an acquisition involving Broadstream for a number of reasons,” he said. “We learned that Broadstream misrepresented the nature of its business. Broadstream lacked sufficient experience with managing adult entertainment companies or understanding of the regulations that govern such businesses. “Broadstream did not have sufficient experience relating to initial public offerings. Neither Broadstream’s nor its sharholders’ assets were going to be used to finance any acquisition of Various by Broadstream.” Ultimately, Mapstead said, Various considered Penthouse to be a much more viable purchase candidate than Broadstream. Attorneys for Broadstream Capital could not be reached by post time. http://www.xbiz.com/news/105807 __________________ We are putting the bastards of this world on notice; greed and corruption will always be met with "a voice made of ink and rage." "Never try and be like anyone else" - Hunter S. Thompson "The truth is the truth no matter how you try and package a lie" - Shellee Hale

03-11-2009	#2
RawAlex Members $100 for every ImLive sign-up Join Date: Oct 2002 Posts: 4,036	Re: Court Asked to Toss FriendFinder Acquisition Suit "Broadstream lacked sufficient experience with managing adult entertainment companies or understanding of the regulations that govern such businesses." Exactly how long have the guys in charge of Penthouse been running it? __________________ Let's go to the edge of disaster Push the pedal and go a little faster Let's slam into a wall at ramming speed Let's go to the edge of a mountain Jump off and lets start countin' Hit the ground and tell me if it bleeds

03-11-2009	#4
RawAlex Members $100 for every ImLive sign-up Join Date: Oct 2002 Posts: 4,036	Re: Court Asked to Toss FriendFinder Acquisition Suit Haha... I think the key phrase is "no true investment". I think that is a nice way of saying that Andrew and Lars weren't going to get a dump truck load of cash at their front door day 1, probably just a bigger part of a future IPO or similar. Penthouse (according to what I could understand of their IPO filing) appears to have given the AFF owners a sizable amount of money up front to make this deal go. But hey, what do I know? __________________ Let's go to the edge of disaster Push the pedal and go a little faster Let's slam into a wall at ramming speed Let's go to the edge of a mountain Jump off and lets start countin' Hit the ground and tell me if it bleeds