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THE SILENT MAJORITY STEERS XYIENCE TO FORECLOSURE

Posted on | December 14, 2007 | 6 Comments

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“The Silent Majority”

Zuffa, Xyience, and Fertitta Enterprises

By: Rich Bergeron

 

 

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They live in the lap of luxury. There are yachts, homes worth tens of millions of dollars, and all the other perks of big business. The Fertitta family falls under the definition of the term “magnates” when it comes to the casino territory. Steeped in a rich history and estimated to be worth billions by some, what they control is an empire of free enterprise, with virtually all of it now under private labels. They are 90 percent owners of Zuffa, LLC, otherwise known as the parent company of the Ultimate Fighting Championships. Xyience has been their biggest ticket sponsor lately, and if Xyience fell there would be trouble. What these men now seem to be planning to do has the potential to produce voluminous amounts of federal and state litigation launched against them. Now in a position to bring Xyience to a screeching halt, a group of private funders with a heavy Fertitta Enterprises interest orchestrated a takeover that is coming to a crescendo now just a month before some investors were told the company would be going public.

Xyience is said to be fast approaching a foreclosure on the Xyience loan offered to the company by a “group of private investors” that included Fertitta Enterprises. Bill Bullard, the GM of Fertitta Enterprises, also subsequently became the Manager of Zyen, LLC, which he used as the on-paper entity that would take ownership of Xyience in the event of a foreclosure. Dana White and Adam Frank publicly stated the advantage of signing the extension in the hopes of growing both companies. In actuality, the writing on the wall points to Zuffa playing the name game to avoid being outed as the real name behind the company’s new money. Zyen, a whole new company sounding just like Xyience without the last two letters, was put in place to follow the yellow brick road from there to complete insolvency and foreclosure. It was all designed to work best if Fertitta Enterprises was not directly connected to the investment/loan/capital infusion finalized between a “private investment group” and Xyience in early October.

The need for confidentiality is illustrated by the very argument Xyience filed to sue me for $25 million. They say right in that first filing that there were investors ready to put in $15 million, but only if my stories came off the net. This was a simple trade: money for an injunction. This is what the whole case against me was built for. They meant to impugn my character by claiming defamation, never thinking they would actually have to prove any defamation actually happened.

It has since become apparent that after just one missed interest payment from their capital contribution to Xyience, the Fertitta-driven investment group is planning to foreclose on that loan. Leading up to the holiday season there are details leaking out that mass layoffs are taking place.

While the push for foreclosure seems imminent, lawyers are mounting cases.

There are even some people banding together who would never normally even associate with each other. This is how bad the new raw deal is looking to the folks who put all their money on a hope and a dream that now appears as if it may never come true. Months ago, people were cursing me out in commentary I couldn’t even print because of the graphic and threatening nature of the stuff. These same people responsible for trying to ruin my reputation by hurling insults at me are now knocking down my door looking for help. They want me to tell them the way out.

It was ironic enough sitting in pretty decent free seats at UFC 78 on Xyience’s dime. Now, people are starting to see the light and the truth. It is all starting to make sense. All the dots are connecting. There are certain people involved who you may never read another thing about here, because to me they are past tense. They are now off the grid and in good hands as far as I can tell. Justice is working its magic.

For others, the war has just begun, and it is a pitched battle. Rumbling down the pipeline is another potential class action suit that may contain more shareholders in federal litigation.

The options all seem grim:

On one hand the company could “stay the course” and go to foreclosure, leaving Fertitta Enterprises free to reconstitute the brand however they would like to. That would leave the bulk of the 340 shareholders holding the big liability bag with no gifts in it, just in time for Christmas. It basically punishes the majority for the actions of a minority group of meddlers. This seems to be the point in the movies when the villain kills the hero’s dog. All hell breaks loose after that. People get mad.

Another option is to foreclose, but get the Fertittas to let the investors buy back their old company in its svelte debt-free format. This option is slightly better than option A as far as potential for profitability, but as far as rebuilding partnerships, it sucks. All the vendors would get written off and new paths would have to be blazed. It’s a heck of a rebuild to undertake. Plus, the current framework of stock holders could be wiped out. They would all have to essentially get the new funder’s permission to take part in the new company. Their old stocks wouldn’t mean a thing. This may be the most appealing option, but only if the asking price is right.

Finally, there is one more foreseeable option, though it may be the most impossible dream of all impossible dreams. There is the honest way out: fund the company and all its broken promises, too. Knock on doors, say you’re sorry, keep the inroads you’ve made in place, or as many of them as you can still salvage. Pay the debts, settle the suits, make things right. It sucks to even imagine how much money that might take, but think of the damage done and the need for redemption here. This company needs to come out to the public and show it has taken bold new steps into a new and hopeful direction past all the difficulties it has been embroiled in. A statement needs to be made, and a responsible team of leaders needs to take charge while those being investigated need to step aside.

A term being passed around a lot lately is “full disclosure.” It is an interesting term. It’s business slang for “tell me everything you know.” It has its roots in legal terminology, too. A lawyer has to present all his evidence to the other side in the spirit of full disclosure. Full disclosure implies there are no restrictions, that you may speak at will, and that you will tell the whole truth. Xyience has not been operating lately in the spirit of full disclosure. The new board of directors has shown no signs of having nothing to hide.

The Fertitta-driven powder keg is about to blow up here. I cannot enter this situation in any official capacity at this point. There is a $25 million bounty on my head in the Clark County courts. It was put on my head by Xyience. I cannot tolerate taking an inside position to guide Xyience in any way, and definitely not with a lawsuit over my head. Some people are suggesting I buy stock or advise the board, but I am a reporter. I am not a stock baron. I have a hard enough time trying to be my own lawyer. I do want to help Xyience, and what I can be is a conduit of information. There are many people contacting me from all angles of this situation and every direction. I am hearing directly from multiple fronts of the battle underway. Only Adam Frank and Kirk Sanford now seem to be in radio silence mode. I have also not heard from any representatives of Fertitta Enterprises. They have not made a peep publicly about any connection they may have to the Xyience deal. They are all being extra quiet lately as they roll to foreclosure, and the shareholders only have 20 days to block that foreclosure if that’s what they choose to do. There is word that Adam Frank will soon be deposed next in a case regarding a land development for a Las Vegas “W Hotel,” which is coincidentally the same hotel Kirk and Sanford used to house me when I came to New York City for UFC 78. The case documents filed against Frank are an excellent read.

I have been called everything from a homosexual to a conspiracy theorist. Some people think I wear a tinfoil hat and operate my shortwave radio in a cabin somewhere in the deep wilderness. The fact is, the folks behind the $25 million con-job of a case against me had a pretty crude smear campaign going to respond to the cold hard facts. They played dirty politics, used slimy legal tactics, and never provided one shred of real evidence that any of what I wrote was false. On the basis of the facts, they had no way to dispute any of it.

Now, there are people calling on me to salvage things. I’m just a writer. I tell it like it is and call ’em when I see ’em. I am not Superman. I cannot leap towers of legal bullshit in a single bound. I can’t bend a crooked company back to straight. I’m not faster than a speeding conspiracy. I can print the facts as I find them, and that’s all I can promise. As far as who CAN save the company. Look no further than the Fertitta family, because that’s where the angry shareholders will ultimately look if foreclosure is followed through on in a manner that burns the bulk of the folks who helped put Xyience on the map. They will bring their pitchforks and torches, an army of salivating lawyers with dollar signs gleaming in their eyes, and a mountain of evidence of the fraud taking place. If the buck stops there, pull up a seat, because this one’s about to get really interesting, and it could get ugly really quick. And not stage ugly. Not Jerry Springer ugly. We’re talking suicide ugly, no retirement ugly, lost house and homeless family ugly. There were people depending on their contribution to pay off. There are still deep questions as to where it all went, but there is one extremely bright light pointing to where it’s going.

Look no further than the trophy case at Fertitta Enterprises. To them it’s not something to polish and point to every time there’s company. Like PRIDE they’ll probably take what they need from it and leave the scraps and bones by the side of the road. Either way, it doesn’t appear those who bought in early will get any kind of a promising pay out in the end.

At the forefront of this whole raw deal are people who prefer to make voluminous millions in every deal they sign, regardless of how they have to make it. The principle of the most profit for the least cost does not coincide with the idea of providing the greatest good for the greatest number of parties who contributed. The same folks who feed and fuel their impossible wealth with these kind of deals always buy out their problems, pay off their competition, and obscure the facts to get whatever they want. They are ruthless, sharks in the water that smell blood, and a blight on mankind that reveals the true horrors of the excessive airs of some of the most capitalist-minded and money-driven people in America. It is disturbing, disgusting, sickening, and awful all at once to imagine the amount of people who will have to endure a miserable Christmas this year: unsure of their futures, regretful of their past, and having no fun with the present.

If miracles are indeed possible, and if the company stays intact in its current state, Xyience will have to depend on a big one.

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