In a Nov. 19 filing with the Securities and Exchange Commission, ProElite indicated that the troubled company could possibly be close to receiving new funding from an outside source.
“The Company is continuing discussions with potential strategic investors to secure financing sufficient to cure any possible default under the Showtime loan agreements. However, there is no assurance as to whether any such financing will be available or available on reasonable terms,” was the exact wording used in the filing.
While ProElite opted to protect the identity of its potential investor, FiveOuncesOfPain.com has learned from its sources that the so-called would-be mystery investor is the Art of War promotion, which had tried to specialize in promoting MMA arena shows in Dallas before cutting back due to financial losses.
Art of War is the subsidiary of SUN Sports & Entertainment, which trades under the pink sheets with the ticker symbol SUNR. The company has undergone changes to its board of directors over the past several months and recently notified the public on Oct. 20 that it had secured $5 million in funding after a period of dormancy from promoting shows over financial issues.
However, it’s important to note that several industry insiders expressed skepticism to Five Ounces of Pain regarding Art of War’s possible involvement with ProElite.
For one, it is believed that one of Art of War’s primary objectives through a potential acquisition is to gain access to the company’s current broadcast deal with Showtime. However, in order to do that, the promotion would have to re-pay over $6 million worth of loans and outstanding debt to the premium cable provider in order to have any hope of moving into the slot previously occupied by EliteXC.
The $6 million figure also surpasses the recent $5 million raised by Art of War and for a company just coming out of a financial crisis, it is not believed they are in a position to take on additional debt.
Additionally, by taking a position in ProElite, Art of War would then be responsible for settling any pending or outstanding lawsuits that have been or could be brought against ProElite. It is believed that any company that would acquire ProElite could be putting itself in a tremendous position of liability. As such, it is unclear if Art of War is still a serious candidate to make a bid to acquire ProElite’s assets.
In other ProElite-related news, MMA Weekly is reporting that the promotion has moved to block EliteXC welterweight champion Jake Shields’ bid to be declared a free agent. Last week, Shields and his manager/father, Jack Shields, had pronounced the younger Shields as free to sign with another promotion in an MMAjunkie.com interview after claiming that a 30-day window given to ProElite to cure a breach in his contract had elapsed. According to the MMW Weekly report, ProElite is claiming that it issued a response in time.
Also, California State Athletic Commission Assistant Executive Officer Bill Douglas has moved to reinstate ProElite’s promoter’s license in the state of California. The license had been suspended last month by outgoing Executive Director Armando Garcia.