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  • Jul 18th, 2009 @ 5:05pm

    Analysis of GGF + TPB deal ...

    Swedish press reports since this story broke indicate that GGF CEO Hans Pandeya's reputation may be pure as yellow circles in the snow.

    In its 4 years of trading, GGF has consistently lost money and never paid a dividend to its stockholders.

    From the start of 2009 GGF stock hovered closely around 0.04 Kroner, until 6 days after TPB verdict, on 23 April, when it tripled to 0.13 before being halted for a few days. Again, on 22.6.09 it suddenly shot from 0.10 to 0.25 on unusually high-volume trades before being halted 43 minutes later at 0.18 Kroner on suspicion of insider trading, this time for 8 days.

    On 30.6.09 Pandeya announced TPB (and Peerialism) buyout plan at an 11am press conference, an hour after GGF stock trading resumed at 0.50 Kroner. GGF's press-release had been posted online at 8:52am and pre-leaked to the Stockholm morning papers.

    By Pandeya's own admission that day, he had not yet entered negotiations with any rights-holder to distribute their content via TPB, yet unilaterally claimed they will facilitate him earning millions $$ monthly in advertising revenue. He further reckoned ISPs will pay him brimming boatloads of lolly for cunningly channeling their server overload through filesharer's spare flatrate capacity - a notion greeted with skepsis by Jon Karlung, CEO of ISP Bahnhof, carrying 10 percent of Swedish traffic: "They can forget that. No ISP is going to join up and pay. He’s gone off the deep end; the reasoning is totally backward and it’s not going to happen."

    TPB blog at 10.43am the same day, apparently surprised by the fulminant newsflash, belatedly blurted that "TPB might change owner", confirming what can already be read in the papers and asked its massive userbase to buy GGF shares, with the obvious effect, if followed, of further boosting or supporting the price.

    Brokep @ 1pm on 30.6.09 said TPB had been in negotiations with Pandeya for 'maybe two months' prior to the announcement, after he had approached them with the initiative, and that he now had 4 weeks to raise the money or the deal would collapse.

    On 1.7.09 AktieTorget.se (swedish penny-stock market) placed GGF on its 'observation/surveillance list' pending a decision on an investigation into possible insider trading. This remains the position as of today, 17.7.09

    Since trading resumed, veritable avalanche volumes of the stock have changed hands at rapidly decaying prices, now back to 0.12 Kroner as of 17.7.09.

    On 15.7.09 at the GGF AGM the board of directors authorised raising cash via new issue of up to 100,000,000 shares (+31% of current volume); stock price falls a further 30% over next 2 days.

    Pandeya has now hired Wayne Rosso of Grokster/Mashboxx fiasco fame to talk up his current world itinerary allegedly negotiating with copyright organizations, although nothing has been signed as of 17.7.09 the deal must close by start of August.

    Despite the chance of any big MAFIAA clients signing up for anything with 'pirate' in the name appearing slim to zero, TPB purchase being conditional on GGF being able to use the site 'legally' and final approval by their board of directors, the numbers ultimately confronting any waiting venture capitalists do not appear overly alluring:

    On 17.7.09 @ 0.12 SEK/share
    GGF = 311,344,000 total shares
    = 37.4 million kronor market capitalisation

    Sale price TPB = 30 million Kronor + same value in new-issue GGF shares = 60 million Kronor
    cash = 30 M SEK = 2,711,560 EUR = 3,823,677 USD
    shares = 250,000,000 @ 17.07.09 @ 0.12 SEK/share

    Sale price Peerialism = 50 million Kronor + same value in new-issue GGF shares = 100 million Kronor
    cash = 50 M SEK = 4,519,268 EUR = 6,372,795 USD
    shares = 416,666,666 shares @ 17.07.09 @ 0.12 SEK/share

    In addition, GGF has undertaken to make initial investments of 25 M SEK in the acquired business.

    TOTAL = 185 M SEK = 16,721,292 EUR = 23,579,344 USD
    i.e. GGF must raise new capital ~= 4.95 (current market capitalisation)
    50% of this in new shares at today's price = 770,833,333 = +147% volume must swamp value of existing stock.
    Question if legally permisible, as AGM has only authorised issue of 100,000,000 shares this year?

    ------

    Q1: If TPB was actually sold in 2006 as per Sunde, why would the crew negociate with Pandeya in 2009 for the sale of something they no longer own for 30 million SEK cash (coincidentally the exact sum the 4 defendants were fined at trial) plus the same value in new GGF stocks?

    Q2: If GGF ever actually writes the cheque, to whom should it be made out, and is this the same person who received TPB site revenue from 2006-9?

    Q3: If the GGF plan was legitimate, why announce it so far in advance and prior to any negotiation with third parties to secure their collaboration vital to the proposed business model?

    Q4: OTOH, if this were a 'pump+dump' share price manipulation, would it matter to the insiders that the sensational cover-story later flops dead?

    Q5: Did TPB crew know that Pandeya would make his announcement on 30 June 2009? If they consented to this, why not be present at a joint announcement?

    Q6: Who bulk bought GGF shares in run-up to 22.6.09?

    Q7: Who bulk sold GGF on days 0 + 1 of announcement?


    Sources:
    http://www.aktietorget.se/
    http://www.whatsnext.se/2009/06/30/podcast-with-peter-sunde- on-the-ggfs-accquisition-of-the-pirate-bay/
    http://www.thelocal.se/20420/20090702/