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Pay By Touch, the troubled company which raised more than $300 million from hedge funds and other investors, has gotten a $9 million emergency loan to avoid closure.
Pay By Touch began a few years ago to push technology that let people use their fingerprints to pay for their groceries and other goods. The venture firms that first invested in the company, however, gave way to large hedge funds not accustomed to running small companies. What resulted was a disaster — a company run by a troubled executive, John Rogers, with apparently no push back from the board or other oversight.
The company “is a train wreck that you could see coming a mile away,” said Bill Burnham, formerly an investor in Mobius Venture Capital. Mobius invested early in the company and sold its stake to a hedge fund in 2006 at a decent profit, “to my great amazement” said Burnham. “I never liked it to begin with,” he said, noting he wasn’t responsible for the deal.
The latest loan appeared in San Francisco Superior Court documents, and comes after a rocky last few months that has seen a range of lawsuits brought against the company for things like securities fraud, wrongful termination and breach of contract, but also several weeks of missed payroll.
The company’s business name is Solidus.
Investors providing the loan are Och-Ziff Capital Management Group, Denarius Touch and Plainfield Asset Management, which together already hold $96 million of debt, according to court filings
A trial has been set for Dec. 21 to decide who has the right to appoint the company’s board.
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