Riverdeep, the Dublin-based technology firm which is preparing a €205 million bond issue, is being sued for $2.5 million by the US firm, Turner Learning.
The dispute relates to a sponsorship agreement under which Turner agreed to advertise some of Riverdeep's products on the CNN television channel website.
Turner Learning, which is the education arm of CNN, alleges that Riverdeep failed to make certain payments under this agreement and is suing for damages. It has filed the suit against Riverdeep in the district court in Atlanta, USA, according to a filing contained in Riverdeep's bond-placement memorandum.
Both parties to the suit failed to agree a settlement in a mediation process in October 2003, and a summary judgment motion has now been laid before the court by Turner Learning. Riverdeep is opposing this and has countersued for $750,000.
The memorandum also contains details on the 2003 salaries paid to Riverdeep's nine senior executive officers. These salaries, which include those of Mr Barry O'Callaghan and Mr Simon Calver, amount to $1.938 million.
The executives are also eligible to receive bonuses worth an aggregate of $1.8 million for the year, although these payments have not yet been allocated.
Meanwhile, it has emerged that serial entrepreneur Mr Pat McDonagh, the founder of Riverdeep and SmartForce (which was acquired by SkillSoft last year), has set up a new e-learning firm.
The memorandum shows that Mr McDonagh has formed a new Dublin-based e-learning company called ScioScience, which has licensed some intellectual property from Riverdeep. The firm, which was registered with the Companies Registration Office in December 2003, will pay Riverdeep $4 million in four separate instalments in 2004.
The first instalment of this cash has already been paid by ScioScience, of which Mr McDonagh and Mr Jim Mulqueen are the only directors.
Mr McDonagh, a former school teacher and now a multimillionaire, is also involved with another e-learning firm, ThirdForce. He will increase his shareholding in Riverdeep to about 31 per cent following its imminent refinancing and bond issue.
Riverdeep's management is currently on a roadshow presenting its bond issue to international investors. The issue is being underwritten by Mr O'Callaghan's former employers Credit Suisse First Boston.
The debt restructuring will see venture capital funds Alchemy Partners and MSD Private Equity, which backed last year's management buyout of Riverdeep, double their investment when they are bought out.
Riverdeep's two biggest shareholders, Mr Pat McDonagh and Mr O'Callaghan, are exercising an option to buy Alchemy's and MSD's 32.9 per cent stake in Riverdeep, at a price of $2.34 per share.
