Funtastic (ASX: FUN) has removed its obligation to pay further earnout payments on its three year LEGO® licence in return for a one-off payment of A$5.5 million.
The $5.5 million payment under the Deed of Variation consists of an immediate payment of $5 million and a further $0.5 million payment in 12 months time.
It will also allow Funtastic to recognise an additional non-recurring profit of $4 million in the current period and focus its efforts on developing the business without distraction.
The early exit payment has been funded from a new line of credit from the company’s major lender which will be repaid progressively within the next 2 years and in line with the payments the company would have made under the earnout arrangement.
The company had secured the licence in March 2012 through its acquisition of the business assets of Australian company KP Multinational.
This licence gives Funtastic the right to manufacture and distribute certain LEGO® brand licensed products throughout Australia, New Zealand, USA, Canada, United Kingdom, Germany, Austria, Switzerland, Finland, Sweden, Norway, Denmark, Iceland, France, Belgium, Netherlands and Luxembourg.
Distribution to China, Hong Kong, Taiwan, Philippines, Thailand, Singapore and Malaysia is made through Toys R Us stores.
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