Beleaguered digital media firm CommQuest’s attempts to restructure its business have received a setback, with investor Lazard Carnegie Wylie lodging a $3.22 million claim for potential breaches and warranty.
LCW’s claim relates to a special share placement in August 2008, when it grabbed a 15% stake in CommQuest for $3.63 million.
LCW’s head of private equity, Lindsay Phillips would not provide details on the specific issues involved in the claim, saying only that there was some disagreement over promises made as part of the share placement agreement.
“Directors and the companies warrant that certain things have happened or will happen.”
But he stressed that LCW hopes the claim can be settled without legal action.
“It’s not meant to be hostile – it’s just business. It will hopefully get resolved in a satisfactory matter to both entities.”
CommQuest’s executive chairman, Roger Sharp, was not available to comment prior to publication.
However, the company said in its statement to the ASX that it “strongly disagrees with these assertions and is seeking legal advice”.
“The company will continue to update the market in relation to this demand, including how it may affect the restructuring program which the company is currently undertaking, in due course.”
CommQuest has been struggling for most of the year with falling revenues and high debt levels.
But in June the company received a lifeline, with Co-Investor (which is backed by the wealthy family of Victor Smorgon) injecting $13 million into the company to reduce its debt by half, to around $13 million.
CommQuest said at the time that it would also consider a capital raising which would further reduce debt to around $8 million.
The company’s shares remain suspended from trade.
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
