Legal proceedings against Yellow Brick Road have commenced over the earn-out conditions contained in a 2014 share sale agreement.
Yellow Brick Road revealed in a disclosure to the Australian Securities Exchange (ASX) that it has been served with a summons over the earn-out provisions stipulated in the agreement it signed to acquire non-bank lender Resi Mortgage Corporation.
Under the share sale agreement dated 8 July 2014, the firm was required to pay $28 million in cash and $5.5 million in shares, with a deferred amount of up to $2.5 million also payable one year after settlement if certain earn-out conditions were met.
Yellow Brick Road said that it will defend its position in court that no amount is payable as the conditions were not satisfied.
“Based on advice it has received to date, YBR is confident that its interpretation of the [share sale agreement] is correct, and that no earn-out amount is payable,” the firm said in its disclosure to the ASX.
The Adviser contacted Yellow Brick Road. However, the company was unable to provide a comment at this stage.