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Press Releases
Rosens announce and add comment
on settlement with mega brands
New York, November 10, 2009
Lawrence and Jeffrey Rosen,
former owners of RoseArt Industries, announced the settlement of their
litigation against Mega Brands (MB) in connection with their sale of RoseArt to
MB over four years ago. The settlement allows the Rosens to recover
approximately $20 million in taxes which they prepaid in expectation of MB's
ability to satisfy its $50 million earnout payment obligation which had been
achieved by the Rosens as stipulated in MB’s Q4 2005 report.
The Rosens said that faced with the worsening of Mega Brands’ already bleak
financial condition, Moody’s downgrade of the company to a junk rating and the
increasing prospects of Mega Brands filing for bankruptcy, they agreed to drop
their earnout claim. The
collection of such a large judgment against MB would be impossible and would
not justify incurring further legal costs in the litigation, they said.
In return MB's $200 million counterclaim against the Rosens will be dismissed
and the Rosens will withdraw their opposition to MB's claims to sums held in
escrow, a significant portion of which involved post-sale taxes.
“Mega Brand’s withdrawal of
its $200 million counterclaim for damages allegedly caused by undisclosed
defects in Magnetix, in the middle of trial, was certainly no victory for them,
and validates our position that the counterclaim was totally unfounded. In fact, they have provided no
explanation for dropping their counterclaim and rejected this exact same
settlement several months ago,” Lawrence Rosen said. “Mega Brand’s debt
obligations still exceed $370 million even after the adjustment of settlement
amounts. The $72 million which according to the company buoyed its bottom
line almost entirely reflects accounting adjustments.”
“This
settlement allows me to put all my focus and resources on competing with Mega
Blocks in the marketplace rather than in the court room,” Rosen said.
Rosen
said his new company Cra-Z-Art, (www.cra-z-art.com),
a division of LaRose LLC headquartered in Randolph, New Jersey, is the fastest
growing art and craft manufacturer in the USA. Sales in the first year will
exceed $50 million, he said.
Product lines include art materials, activity and craft kits, cork and
wipe off boards, writing instruments, games and puzzles.
“Our Cra-Z-Art staff, which includes 45
former Rose Art personnel, is thrilled to be back doing what we do best in
creating new exciting innovative products,” Rosen said.
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