German music service Juke has agreed to pay €4 million ($4.5 million) to London-based digital services company 7digital. The settlement ends a partnership that began in mid-2017, when 7digital acquired competitor 24-7 from Juke parent company MediaMarktSaturn -- a deal that saw 7digital take over day-to-day operations of Juke.
Under the agreement, 7digital has been released from all contracts and commitments related to Juke, which has also agreed to write off all interest payments and £250,000 ($330,000) of the principal amount of the convertible loan note issued to Juke. 7digital has agreed to cover the balance of the convertible loan note, or £500,000 ($660,000), with the proceeds of the agreement.
The deal will also see the "orderly sale" of MediaMarktSaturn's holdings in 7digital, currently approximately 11.5 percent of the issued share capital of the company. Following the sale of 24-7 to 7digital, MMS became the latter's biggest individual shareholder.
"I am extremely pleased to put this period of uncertainty behind us," remarked Simon Cole, 7digital's CEO. "Whilst we would have preferred not to have been in this position, we are very satisfied with the settlement which represents the full value of all future financial commitments by Juke."
Cole added that the "immediate injection of cash will allow us to restructure our overhead base and reposition the company for continued growth. We have had a good start elsewhere to the current financial year and will update shortly on our recent contract wins."
Shares of 7digital fell sharply Monday, down 13.4 percent.