Nascar Video-Game Maker Motorsport Sued by Investors Before IPO
- Discounted share purchase in 704Games unit improper, suit says
- Motorsport IPO offering 3 million shares in gaming company
Motorsport Games Inc.’s top executive was accused in a lawsuit of wrongfully shortchanging investors when he acquired a discounted minority stake in a unit that is part of the company’s planned initial public offering.
Dmitry Kozko, Motorsport’s chairman and chief executive officer, improperly usurped a “corporate opportunity” when the company acquired an additional 28% stake in 704Games, which makes Nascar racing games, according to a lawsuit filed Monday in state court in Miami. Motorsport already owned more than 53%, and the 704Games unit generates almost all the parent company’s revenue, according to the suit.
Miami-based Motorsport is scheduled to sell shares to the public on Tuesday. The company announced Monday it increased the IPO’s shares to 3 million and at a price of $19 to $20 each. That’s up from 2.35 million shares at $16 to $18 the company originally offered.
The 28% stake in Charlotte, North Carolina-based 704Games was purchased at a discount by Motorsport from minority holders such as billionaire Phil Falcone’s HC2 Holdings, and came at the expense of other 704Games investors, according to the lawsuit. The additional stake now represents $94 million in value to Kozko and Motorsport, the 704Games investors said.