)
Shares in Vinyl Group (ASX: VNL) have fallen by 7 per cent today after it was revealed that entities related to the sellers of The Brag Media have taken the music media and technology company to court seeking a $2 million performance payment.
The plaintiffs are seeking the $2 million as well as payment for lost remuneration and the opportunity to receive a bonus and options, alleging that Vinyl Group is liable due to the termination of The Brag Media co-founder and former managing director Luke Girgis "without cause"
As part of the sale of the youth publisher, Girgis was to receive five million options in Vinyl Group with a seven-year expiry, contingent on him remaining with the company for at least a year after the acquisition.
Around six months after the deal was announced in December 2023, Girgis was let go in June 2024 with the group claiming that staffing changes would amount to $750,000 in annual savings.
Vinyl Group "strongly refutes" the claim regarding Girgis, alleging that following an external investigation his employment was terminated for serious misconduct, "including but not limited to financial misconduct".
"Under the terms of the share sale agreement, the performance payment was contingent on specific financial targets being met and subject to Mr Girgis’ employment agreement not being terminated other than for cause or where Mr Girgis being convicted of an indictable criminal offence or any act of fraud," the group stated in an ASX announcement.
"These financial targets were not achieved by The Brag Media business, despite Vinyl successfully implementing operational improvements, reducing costs by more than $750,000 as previously disclosed, whilst growing second half CY revenues over the same period in 2023 by 12 per cent.
"As a result, the company maintains that no performance payment is due."
Business News Australia has approached Girgis for a response to Vinyl Group's allegations but has not received a response at the time of publication.
The group claims that following consultation with its legal counsel, the board considers the claims have little merit.
"The company intends to vigorously defend the claims and intends on lodging a crossclaim where it is likely to be alleged that there were breaches of the share sale agreement by the sellers and further misconduct which has been uncovered during Mr Girgis’ tenure as both an employee and director," Vinyl Group states.
VNL shares are down 7.14 per cent at $0.13 at 1pm AEDT, representing a devaluation of its market capitalisation of more than $12 million.
Another media acquisition that now forms part of the recently launched Vinyl Media, Mediaweek, let go of its editor-at-large and former owner James Manning within months of Vinyl Group's purchase of the publication in November last year.
)
