TechFinancials plc (AIM: TECH), a technology provider to financial trading brokers, today announced that after entering into a Joint Venture (JV) agreement with IBID Holdings Limited on 3rd February, 2016 to manage one of the company’s B2C binary options trading brands, the company is terminating the agreement due to a breach by the partner.
TechFinancials is considering legal action against IBID Holdings for violations, which include, but are not limited to, failure to transfer the initial investment amount.
The company has confirmed that the termination of the agreement will have no material impact on the results for the current financial year and that trading of both its B2B and B2C divisions remains in line with market expectations.
Registered in Hong Kong, IBID Holdings Limited is a company involved in developing growth oriented online companies. The JV followed the creation of a similar one with Optionfortune, also of Hong Kong, and was part of TechFinancial’s plans to expand its business in Asia, as reported by Finance Magnates earlier in February this year.
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Under the terms of agreement with IBID, TechFinancials held a controlling 51% stake in the JV compared to 49% for IBID.
After initiating the JV, IBID was due to make an initial investment of $300,000 and the company also agreed to provide additional working capital if required, for the JV to achieve its profit milestones goal of at least $100,000 in net profit for three consecutive months.
Under the terms of the deal, IBID and TechFinancials agreed that the profit milestone must be achieved by the JV no later than July 31st, 2017.
At the time the agreement was signed, the two firms agreed to negotiate new terms in good faith in the event that the profit goals weren’t met, however, TechFinancials is now considering the instigation of legal action against IBID Holdings.
According to a recent IBID Group statement on the termination, “IBID is surprised by the unjustified decision of TechFinancials to terminate the agreement between them and it intends to pursue its rights through the applicable legal avenues. IBID Group’s strategy remains focused on undertaking selective strategic acquisitions that enhance the existing portfolio and where value can be created and meaningful returns to its shareholders can be delivered.”