Red Alert reduces Rogers' photos cash bid by $10M in filing

Red Alert Media Matrix has reduced its cash offer for the photo archives formerly owned by John Rogers of North Little Rock from $28 million to $18 million, it said in a Pulaski County court filing Tuesday.

Atlanta-based Red Alert is still including in its offer what it values as $1 billion in unregistered stock in Red Alert Media Matrix. The company's stock currently is not traded publicly.

The offer includes bids for two of Rogers' former businesses -- $11.16 million in cash and $620 million in Red Alert stock for Photo Archive LLC and $6.84 million in cash and $380 million in Red Alert shares for Sports Card Plus.

The offer was made in a case filed last year by First Arkansas Bank & Trust of Jacksonville. Pulaski County Circuit Judge Chris Piazza is presiding over the case.

The offer was reduced by $10 million because Red Alert is no longer able to acquire the assets from Fairfax Media Management, said Chris Clark, Red Alert's general counsel. Fairfax owns dozens of newspapers in Australia and New Zealand and sold the rights to its archives to Rogers.

Fairfax's archives represented 35 percent of Red Alert's $28 million offer, so the new offer was reduced 35 percent, said Tim Holley, Red Alert's chief executive officer.

Rogers relinquished ownership of his businesses to his ex-wife, Angelica Rogers, in a divorce settlement in October.

This is the third offer Red Alert has made for the archives, which total more than 60 million photos from more than 50 newspapers. Red Alert has an appraisal from a New York firm putting the assets' value at more than $1 billion.

Rickey Hicks, a Little Rock attorney representing Red Alert, said in a letter to Piazza on Monday that "no other party has signed a binding letter of intent or submitted to the court a written offer to purchase the assets."

In January, Red Alert offered $59 million in cash for the archives but was unable to get a lender to agree to finance the deal.

In April, Red Alert made an offer of $28 million in cash and $1 billion in stock.

That offer seemed to have the approval of First Arkansas Bank & Trust of Jacksonville, which had sued Rogers and his companies, seeking about $30 million for loans Rogers has not repaid.

"To the extent that our understanding is accurate, First Arkansas Bank & Trust does not foresee filing an objection of record with respect to the [April] agreement," Larry Wilson, chairman and chief executive officer of First Arkansas, said in an April 24 email to Michael McAfee, the receiver in several lawsuits filed against Rogers and his companies.

Wilson said in the April email that "it is our understanding" that if the offer had closed, the debt owed to First Arkansas would have been paid in full, including principal, interest and attorneys' fees.

Tuesday, Wilson said, "We're obviously very close to that situation, working through that situation." But he referred questions about the new offer to Roger Rowe, the bank's attorney in the case. Rowe did not return a call seeking comment.

In response to a question about whether he believes First Arkansas will approve of the offer, Holley said, "It isn't really our position to have to tell where the money goes."

"We're just buying assets," Holley said. "It's up to the court to decide who gets the money. And that removes the objections that some of the people have filed saying we should put into our agreement a priority distribution. We'll leave to the court to decide who gets what. We just want to buy it and monetize these assets, make some money and create some jobs in Arkansas."

Red Alert's goal is to roll the assets into a public company and create more value for its shareholders, Clark has said.

Debt-holders of Rogers' businesses would be included among the new public company's shareholders, and more than 500 Red Alert shareholders based in the Netherlands and the United States also will be included, Clark said.

As it did in its April offer, Red Alert's proposal Tuesday cut McAfee's fee as receiver from the 5 percent set in Piazza's order appointing McAfee as receiver to only 2.5 percent.

McAfee said he would respond in court filings about the reduction in Red Alert's offer as well as its proposed reduction in his fee.

At $18 million, McAfee's 5 percent fee would be $900,000. At 2.5 percent, his fee would be $450,000.

"We've had a lot of unnecessary opposition in the past six months," Holley said. "This could have been all resolved 45 days ago if he had signed the agreement and gotten the deal done. I understand. That's his prerogative."

Instead, Red Alert proposed also to pay a 2.5 percent "legal fee" to Little Rock attorney Richard Mays Sr. Mays is not listed on the docket as a party to the First Arkansas Bank & Trust lawsuit.

But Mays deserves a 2.5 percent fee because he brought the deal to Red Alert, Holley said.

"He brought us Mac Hogan [a former partner of John Rogers]," Holley said. "He holds it together like glue. There were times I was about ready to quit."

A hearing in the case has been set for June 15.

Business on 06/03/2015

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