Row over Hong Kong-based investment group’s purchase of Forbes goes to court

Integrated Whale Media Investment stands accused of failing to meet terms of deal

PUBLISHED : Wednesday, 04 November, 2015, 3:39pm
UPDATED : Wednesday, 04 November, 2015, 3:51pm

The sale of a majority stake in the near-century-old Forbes media empire to a Hong Kong-based investment group, announced with great fanfare last year, has now soured over allegations of unpaid debts and corporate misbehaviour.

Integrated Whale Media Investment (IWM), based at 9 Queens Road, Central, stands accused of failing to meet the terms of the deal, as well as withholding income streams owed to the founding Forbes family.

The complaint is detailed in a 100-page court document filed last Friday in the US state of Delaware by Forbes family companies seeking compensation. Key sections on the deal’s financing, guarantees and indemnities were all redacted from the document released by the court.

“From the outset of the supposed partnership, Integrated Whale and its principals have steadfastly refused to pay what they clearly owe, and instead have made a series of baseless – and often patently false – excuses,” the lawsuit filing read.

Registered in the British Virgin Islands, IWM includes among its shareholders Wayne Hsieh, founder of Taiwanese electronics company Asus, and Hong Kong businessman Yam Tak-cheung.

IWM paid upfront for an 80 per cent stake in a deal that valued Forbes Media at around US$475 million, sources say. IWM also acquired a further 15 per cent stake in the media group, with that payment structured as a series of promissory notes due to be paid off gradually with interest over seven years.

After an interest payment was missed in October last year, the Forbes family companies exercised their right to call in the promissory notes, the filing said.

The Forbes family, now headed by Stephen Forbes, who stayed on as chairman and editor-in-chief- after the sale, also accuse IWM of “improperly leveraging” its position as controlling shareholder “to embark on a retaliatory, multi-front campaign of oppression through the abuse of the corporate machinery”.

The original deal left the Forbes family with an approximately 5 per cent stake in the business and two seats on the board.

In a statement IWM said it “rejects the allegations contained in the complaint as completely without merit. IWM is currently reviewing all legal options regarding the complaint and reserves its rights.”

The missed interest payment, worth around US$50,000 sources said, was later settled, but only after the notes had been called in, while other monies allegedly owed to the Forbes family stemmed from licensing deals in the US, as well as the outstanding balance in an escrow account.