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Marketing services provider Media Square is suing Porta Communications for a minimum of £760,000 in damages.
Media Square claims that Porta and its chief executive David Wright “attempted to effect an unlawful conspiracy” as part of an attempt to back the acquisition of all or part of Media Square. The company claims that its advertising division was disrupted. A trading statement in October said that there were £250,000 of cash costs in the first half that related to reorganising the advertising division.
Wright is a former boss of Incepta which merged with Huntsworth before Media Square’s ill-fated acquisition of part of the Incepta business in September 2005.
Given Media Square’s habit of disappointing shareholders this appears to be the latest excuse for failing to meet expectations. A £100,000 bad debt due to MF Global’s collapse, combined with the ‘disruption’ to the advertising division, means that profit in the year to February 2012 will be lower than the previous year. Interim figures are due this month.
Media Square has already started to renegotiate its bank facility with Lloyds, which runs until July 2013 but needs to be renegotiated next year.
At 8.25p a share, down 1.62p, Porta is valued at £5.84m. At 1.12p a share, down 0.68p, Media Square is valued at £405,000. Underlying net debt was £19.5m at the end of February 2011, according to Media Square, and that is expected to have increased.
Bob Morton-related Hawk owns 7.09% of Media Square and he is a former shareholder and director of Incepta, where he worked with Wright.
The largest shareholder in Porta is Graham Herring, who sold his Threadneedle Communications financial PR business to Porta earlier this year. He owns 11.65% of Porta.
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