Starcom to appeal after court finds in favour of former lender

Starcom has launched an appeal after a court in Israel found in favour of a £1m claim filed almost two years ago.

The AIM-listed vehicle tracking company had previously been advised by lawyers that the claim by Top-Alpha Capital, a boutique financial services company based near Tel Aviv, was unlikely to affect the company due to the weak foundations of the case.

Moreover, chief executive Avi Hartmann and chief operating officer Doron Kedem had in 2012 signed an agreement with Top Alpha to the effect that they would personally discharge any liability or obligation falling upon members of the Starcom Group.

The Top Alpha claims relates to a loan agreement with Starcom Israel in 2011, which contained a provision requiring Starcom Israel to use the services of Top Alpha if it listed on a stock exchange prior to July 2013, in return for a commission of 9% of funds raised.

But as Starcom said in its February 2013 AIM admission document, the requirement to use Top Alpha’s services was
terminated in an agreement dated 28 June 2012 in exchange for a payment of $80,000, repayment of the loan and grant of an option over 1% of Starcom's Panama subsidiary.

On Monday, Starcom revealed that the court judgment in Israel had concluded that "there may be a claim", though the amount remained unquantified, "in apparent ignorance" of the above agreements.

"The company's legal advisors have re-confirmed their previous advice and their strong view is that the substantive part of the court judgement is without merit and will be overturned in a higher court. The court's decision has therefore been appealed."

Starcom's directors said they consider it likely that the appeal process will take "many months if not years" to be resolved.