Update: 8:22 a.m.PT To include news of board vote and reports that Global Gaming's stock may not resume trading for weeks.
As expected, Hans Pandeya, CEO of Global Gaming Factory X, told reporters in Sweden on Thursday that his company's acquisition of The Pirate Bay will go through.
Everyone reading that statement should take it with a grain of salt, or maybe a whole shaker full.
Global Gaming, a Stockholm-based software maker and operator of Internet cafes, stirred up a media storm in June by announcing that the company, which only generated about $800,000 in revenue in 2008, planned to to buy The Pirate Bay for about $8 million. The company's board voted to go ahead with the plan.
Of the many challenges that threaten the deal, Pandeya has still not produced the money to pay for the site. While the company voted to go ahead--Pandeya controls 60 percent of the stock--a final acquisition still appears unlikely.
The Pirate Bay is a BitTorrent search engine that helps users find .torrent files. These files are very often pirated films and music. The site has attracted a massive global following, but a long campaign by the music and film industries has led to a jail sentence and nearly $4 million judgment against the site's founders. In the wake of last April's verdict against the men, The Pirate Bay was put up for sale. The founders say they have not owned the site since 2006.
In June, Pandeya provided few details about how he was going to come up with the funding needed to complete an acquisition, as well as the other $14 million to buy peer-to-peer technology company, Peerialism. Using Peerialism's technology, Pandeya said he would build a new P2P platform for a revamped Pirate Bay site.
Prior to Thursday's meeting of Global Gaming's shareholders, of which only two showed up, the company issued a press release saying that all the funding for the acquisition was in place and that software maker was close to striking a licensing deal with one of the four major recording companies.
But as he headed into the meeting, Pandeya told reporters that his original investors, the ones he refused to identify to Swedish exchange authorities, had backed out because of all the recent scrutiny of his company. He said he has new investors, and guess what? He's not naming them either.
Nor has he named which one of the four major labels he's allegedly close to cutting a deal with. He hasn't named a Russian investor that allegedly bid to buy The Pirate Bay from him once he acquired it. The only person associated with the deal Pandeya has named is John Fanning, who co-founded Napster with nephew Shawn. Pandeya said in a press that Fanning offered $10 million to buy The Pirate Bay from him, just as the mysterious Russians had, once he obtained the company.
Fanning denied it.
Everything is fine, Pandeya told reporters.
Pandeya will guarantee the investors' money with his own cash. But Pandeya owes the Swedish government back taxes. In addition, Global Gaming's former CTO has also filed claims with the government alleging the company and Pandeya personally, owe him over $800,000.
Perhaps Pandeya can sell some of his Global Gaming shares to pay his debts?
That won't work either. Because of suspicious trading associated with the company's stock--it spiked right around the time the company announced it would acquire The Pirate Bay--Swedish exchange officials have halted trading. A criminal investigation has been launched.
Swedish Web news site E24.se reported that Pandeya demanded that AktieTorget, the Swedish exchange where Global Gaming's stock is offered resume trading.
An official for the exchange said that won't happen until he is convinced that the company possessed the money when it said it did and also must check out whether the bids from Fanning and the Russians were legitimate. The official said it could take several weeks.