Shares in PCG Entertainment plunge on debt dispute

31st May 2016 13:54

(ShareCast News) - Shares in PCG Entertainment slumped almost 40% after it revealed a debt dispute that could materially affect its trading and financial position going forward.The Asia-Pacific online gaming and media company said the dispute was linked to its 2015 acquisition of Center Point Development Corporation (CPDC).PCGE said the acquisition deal provided that CPDC's debtor, creditor and cash balances at 11 August 2015 would remain with the former major shareholder, Kolarmy Technology.This included a $2.7m debt to a supplier. PCGE said on Tuesday it had become aware Kolarmy had not repaid this debt, and that it had since been asked for the money."This has resulted in a dispute between the company (PCGE) and the supplier, as the supplier is now (despite the signed agreement between the company, the supplier and Kolarmy, which absolved the company of any responsibility for the debt) seeking repayment of the debt from the company," PCGE said."Whilst no legal action has yet been taken, this dispute could materially affect the company's trading and financial position going forward," PCGE said in a statement.Moreover, PCGE added that a principal customer was in dispute with it over trading terms previously agreed.Whilst it expected to resolve this ongoing matter, PCGE was owed certain receivables that if not received might place further pressure on its trading operations."The company (PCGE) is taking advice and is seeking to resolve this amicably," it said.