Brag Media cofounder and former CEO Luke Girgis has launched legal action in the NSW Supreme Court against the company that bought his business, ASX-listed Vinyl Group.
The acquisition deal dates back to December 2023, when Vinyl (ASX: VNL) announced it would pay $8 million in cash to acquire 100% of The Brag Media and its subsidiaries, with a further $2 million payable in cash or stock based on financial performance.
At the time WiseTech Global cofounder Richard White invested $11 million via his fund, RealWise Group Holdings to fund the M&A deal.
Brag Media, which publishes Rolling Stone, Variety and other titles in Australia, was one of a number of acquisitions made by Vinyl in recent years. The company owns blockchain music startup Serenade, music credits database Jaxsta, the Tinder-style musician social network Vampr, and in December acquired publisher Concrete Playground for $5 million.
Last September, Vinyl also acquired trade publication Mediaweek. Its former owner, editor-in-chief, James Manning, departed the business suddenly after nearly 25 years, with Unmade reporting that he received an email Vinyl chief operating officer Joel King telling him editorial services were no longer required, effective immediately, told staff in the office “I’ve been sacked”, packed up and left. Vinyl denied he was sacked.
In June last year Girgis also departed suddenly, despite being on a two year earn-out. At the time, Vinyl to the market his depart was result of “a thorough review of The Brag Media to unlock further synergies and efficiencies” that would generate “$750K worth of savings over the next year”.
In response to the legal action, Vinyl issued a statement claiming: “Girgis was terminated for serious misconduct, including but not limited to financial misconduct” following an external investigation.
“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. These financial targets were not achieved by The Brag Media business,” the Vinyl ASX announcement said.
Grigis, now CEO of the meal delivery startup Providoor, and founder of Seventh Street Holdings, is seeking at least $2 million in performance-related payments under the sale agreement.
His two cofounders also left the business last year: Sam Benjamin, shortly after the merger, and Poppy Reid, the Rolling Stone editor, a few months after Girgis.
Vinyl claims the financial targets set it the sale agreement were not achieved “despite Vinyl successfully implementing operational improvements” and “maintains that no performance payment is due” and its board “considers the claims have little merit”.
The company said it “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’s share price, which has been on a tear over the last 12 months, rising nearly 86%, has fallen by around 10% today to $0.125
The matter returns to court on March 5.
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