Vestin buys Namath’s shares

Kevin Rademacher

Tuesday, Jan. 4, 2005 | 10:43 a.m.

Las Vegas-based Vestin Group Inc. said Monday that it has entered into an agreement to purchase 400,000 shares in the company controlled by retired football star Joe Namath.

The $1.6 million deal also formally ends Namath's contract as spokesman for the lending company. Namath had $2 million remaining on the contract which was signed in 2001. The deal also ends the threat of legal action against Vestin by Namath.

With the purchase of the shares, the company also will cease to be traded on the Nasdaq Small Cap Market. Vestin said it will apply to be listed on the Nasdaq OTC Bulletin Board.

Vestin announced in an April 2004 Securities and Exchange Commission filing that it would terminate Namath's contract. Michael Shustek, Vestin's chief executive, later confirmed that Namath's deal was being terminated because of an embarrassing incident during an nationally televised National Football League game.

Namath attracted negative press after slurring his speech and making advances toward ESPN reporter Suzy Kolber during a sideline interview at a New York Jets game in December 2003. A month later Namath said in a television interview he would begin counseling for alcohol abuse.

In the SEC filing, Vestin said that a contract clause allowed the company to "terminate the licensing agreement in the event ... Mr. Namath's conduct has reflected so seriously on Mr. Namath's public reputation as to prejudice substantially the company's business interests if the license agreement were to continue."

The cash for the stock purchase is being borrowed by Vestin from Shustek Investments Inc., a Nevada corporation owned by Shustek. The terms of the loan are monthly payments of interest only at the rate of 8 percent with the entire principal balance due one year from the execution of the promissory note. The loan is secured by a stock pledge.

The purchase of Namath's shares also appear to further Shustek's stated interest in purchasing enough of the outstanding shares to take the company private. As recently as August, Vestin said Shustek was interested in buying enough shares that could cause the company to be de-listed and allow it to de-register as a reporting company.

While the current move will likely push the company to the OTC Bulletin Board, it will apparently still have more than 300 shareholders, requiring it to continue making public filings with the SEC.

Vestin also said on Monday that it received a letter of resignation from David Chavez, a board of directors member and chairman of the company's audit committee member.