MATERIAL DEBT?
Unsealed court papers filed in conjunction with WMG’s Delaware suit against Maverick and Maverick’s Los Angeles suit against WMG reveal that Maverick has lost about $66 million since 1999, the paper says. And if Maverick wants to buy out WMG’s 40% stake in their joint venture, WMG expects to recover that $66m and more.
WMG is also looking to be paid back for a $20 million loan to Maverick and an unrecouped “special fee” amounting to another $6.5 million, bringing the total to $92.5 million the major expects to be paid.
Maverick filed its breach-of-contract suit in March, shortly after WMG made the first move to sue. The suits followed the breakdown of negotiations over how to end the partnership. Maverick principals Madonna, Guy Oseary and Ronnie Dashev are now butting heads with new WMG owners Edgar Bronfman Jr. and partners.
“Maverick has invented and asserted trumped-up and baseless claims of fiduciary breach and breach of contract against its long-term partner,” the Post quotes the Warner complaint as saying. “These claims are asserted solely to disrupt the buy/sell procedure and to secure a more favorable outcome for Maverick than what is required by the terms of the parties' agreement.”
That buy/sell procedure, triggered by the end of the joint venture, which expires at the end of the year, requires Maverick to suggest a price to buy out WMG’s stake. Based on that, WMG then has the option to be bought out or to buy Maverick out. If WMG opts to be bought out, according to the paper, Maverick would be forced to come up with the $92.5 million and the buyout price. If it can’t pay, WMG claims it can take over Maverick with no further obligation to its partners.
Maverick renegotiated the JV with WMG in 1999, making it 60% owner instead of the previous even split. Maverick reportedly made some $50 million in profits from its inception in 1993 through 1999.
