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Things are getting kinky...

Surfstitch legal opponent buys substantial stake

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New Surfstitch CEO Mike Sonand said he was focused on restoring the beleaguered media and retail company to profit. Michele Mossop
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by Jessica Gardner
The company behind titles like Surfing World and Coastalwatch, which is sparring with Surfstich in court, has made the surprise move of taking a substantial stake in the embattled company.
In what may be a case of the hunted becoming the hunter, a company called Crown Financial revealed on Monday that it had paid about $2.7 million last week to take its total shareholding in Surfstitch to 8.25 per cent.
The company is linked to Three Crowns Media Group, which Street Talk revealed last week was the mysterious third party with whom Surfstitch had promised to share content from its subsidiary publishers like Magic Seaweed and Garage Entertainment. Surfstitch had considered buying the family-owned media company before it signed a long-term agreement to share its content, which is now the subject of legal action.
Three Crowns Media Group has a portfolio of magazines and websites like Surfing World, Transmoto, Coastalwatch and Mountainwatch and operates out of the same office on Sydney's Northern Beaches as a large related web of companies.

According to documents lodged with the corporate regulator the ownership of Crown Financial and Three Crowns Media Group both flow through Sundell Group - where Kim Sundell is the executive chairman - to the same ultimate owner, Bogasi, which is controlled by James Sundell. David Wooldridge is the common company secretary between the two entities as well. The company did not respond to requests for comment.


At its full-year results last week Surfstitch reported a $155 million loss from a year in which it also lost two chief executives and a chairman. New chief executive Mike Sonand said he was focused on restoring the beleaguered media and retail company to profit.
However looming court cases involving Surfstitch's newest substantial shareholder may be a distraction to that ambition. In its results Surfstitch revealed that entities within its group were defendants in legal proceedings arising out of a series of agreements entered into with Coastalwatch, Three Crowns Investments and Coastalcoms during 2015-16.
Three Crowns Investments is trying to recoup $275,000 in fees related to the branding of an app, plus costs and interest, it says it is owed, according to notes in Surfstitch's financial report. In addition Coastalcoms is seeking damages of $US8.73 million ($11.49 million) as a result of the termination of a software licensing agreement entered into between the two parties in early 2016. "The Group will be defending the above proceedings," Surfstitch said in its report.
Surfstitch shares rose 6.1 per cent, or 1¢, to 17.5¢ on Monday, which is well down on their 12-month high of $2.09 reached last November. The company is worth just $46 million, compared to $550 million a year ago.

A Surfstitch spokeswoman declined to comment.


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