BERLIN — Things were looking grimmer Wednesday for beleaguered German kidvidder EM.TV as a group of investors demanded compensation of around DM25 million ($11.9 million).
About 450 shareholders are threatening a joint lawsuit if they do not receive compensation by March 31. The group’s attorney, Klaus Rotter, alleged EM.TV failed to give shareholders sufficient information about the acquisition of the Jim Henson Co., creator of the Muppets, for $680 million at the end of 1999.
The investors also claim EM.TV tried to conceal the state of its earnings and of share dealings by company topper Thomas Haffa and his brother, former finance chief Florian Haffa.
They also were angered by EM.TV’s deal with racing mogul Bernie Ecclestone to buy 50% of Formula One holding company SLEC. That deal gave Ecclestone the right to force EM.TV to buy an additional 25% stake, which EM.TV bought in February with the help of the Kirch Group.
EM.TV confirmed it had received a claim from Rotter, but would not comment on the case.
The Munich state prosecutor and the German securities regulator already are investigating the company, and a number of other shareholder groups are planning claims.
Complaints piling up
The Deutsche Schutzvereinigung fuer Wertpapierbesitz (DSW), a German shareholder protection group, said in December it had received 800 complaints from owners of EM.TV stock, while law firm Tilp & Kaelberer said in January it had received requests from 150 investors demanding about $4.7 million from the company.
The German securities regulator is considering a formal insider-trading investigation. Munich’s chief state prosecutor also is looking into alleged breaches of securities law by the Haffas and other EM.TV execs.
Thomas Haffa has admitted making mistakes while managing the rapid growth of the group, but has denied improprieties.