NEW YORK, Nov. 9 /CNW/ -- Lawrence and Jeffrey Rosen, former owners of RoseArt Industries, announced today the settlement of their litigation against Mega Brands (TSX: MB) in connection with their sale of RoseArt to MB over four years ago. The settlement allows the Rosens to recover approximately $20 million in taxes which they prepaid in expectation of MB's ability to satisfy its $50 million earnout payment obligation which had been achieved by the Rosens as stipulated in MB's Q4 2005 report.
The Rosens said that faced with the worsening of Mega Brands' already bleak financial condition, Moody's downgrade of the company to a junk rating and the increasing prospects of Mega Brands filing for bankruptcy, they agreed to drop their earnout claim. The collection of such a large judgment against MB would be impossible and would not justify incurring further legal costs in the litigation, they said. In return MB's $200 million counterclaim against the Rosens will be dismissed and the Rosens will withdraw their opposition to MB's claims to sums held in escrow, a significant portion of which involved post-sale taxes.
Lawrence Rosen said, "This settlement allows me to put all my focus and resources on competing with Mega Blocks in the marketplace rather than in the court room."
Rosen said his new company Cra-Z-Art, a division of LaRose LLC headquartered in Randolph, New Jersey, is the fastest growing art and craft manufacturer in the USA. Sales in the first year will exceed $50 million, he said. Product lines include art materials, activity and craft kits, cork and wipe off boards, writing instruments, games and puzzles.
"Our Cra-Z-Art staff, which includes 45 former Rose Art personnel, is thrilled to be back doing what we do best in creating new exciting innovative products," Rosen said.
SOURCE LAROSE INDUSTRIES
For further information: For further information: Lawrence Rosen, Chairman, CRA-Z-ART / LaRose Industries, +1-973-543-2037, Ext 205, LRosen@CRA-Z-ART.com Web Site: http://www.cra-z-art.com