Troika Media (NASDAQ:TRKA) stock is on the move today after the company released a litigation update concerning Carrano et al. v. Troika Media Group, Inc. and CD Acquisition Corporation. On July 17, plaintiffs Michael Carrano, Thomas Marianacci, Maarten Terry and Sadiq Toama — otherwise known as the sellers of Converge Direct — opted to file a complaint against Troika and CD Acquisition, Troika’s special purpose acquisition company (SPAC) sponsor.
All of the plaintiffs joined Troika through long-term employee agreements after the company bought out Converge Direct in March 2022 for approximately $125 million in cash and restricted common stock. For example, Toama was added to Troika’s board and was appointed CEO and President while Tom Marianacci kept his role as CEO of the Converge entities. Other members of Converge’s executive leadership team joined Troika as well.
TRKA Stock: Troika Provides Litigation Update
On July 28, Troika CEO Sadiq Toama announced his plans to recuse himself from the complaint without prejudice. In addition, Toama also recused himself from all deliberations the board may have concerning the complaint. Toama did not provide a reason as to why in the update.
The plaintiffs allege that Troika owes them money under a Membership Interest Purchase Agreement (MIPA) signed in March 2022 and are seeking judgement to confirm their views and damages related to the contract violation. At the time, Troika took on a $76.5 million first lien term loan to fund the acquisition. Blue Torch Capital was the provider of the financing. Since then, Troika and Blue Torch have extended the outside date — which concerns the deadline date for a refinancing event or sale — several times.
Per the filing:
“On July 28, 2023, the Company and Blue Torch entered into a third amendment to the A&R Limited Waiver (the ‘Third Amended A&R Limited Waiver’) pursuant to which Blue Torch agreed to extend the Outside Date from July 28, 2023 to August 28, 2023, subject to potential extension if a definitive written agreement is delivered on or prior to August 28, 2023 providing for cash repayment in full of all obligations owed to Blue Torch or which is otherwise acceptable to Blue Torch.”
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On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
