German media giant Bertelsmann agreed Friday to pay US$8 million to take over the troubled music-swapping site Napster, and will bring back executives who quit just days earlier.
The money will go toward the payment of Napster's creditors, and allow Bertelsmann to acquire the assets of the California-based Web site, which has been dormant for months as a result of a court order.
A source familiar with the terms of the deal said Bertelsmann will, in addition to paying US$8 million, forgive a loan to Napster of about US$85 million.
"We are very pleased to have reached an agreement with Napster's board of directors," said Joel Klein, chairman and CEO of Bertelsmann Inc, the US unit of Bertelsmann AG of Germany.
Bertlemann also said Napster CEO Konrad Hilbers and Napster founder Shawn Fanning have rejoined the firm. The pair, along with other executives, quit earlier this week after the board reportedly rejected a US$30-million buyout offer by Bertelsmann.
Fanning will hold the title of chief technology officer for Napster.
"We're happy to see Napster move forward with Konrad Hilbers at the helm," said Klein. "We're proud to have Shawn Fanning continue to work on its development."
The developments Friday quelled a ongoing boardroom battle at the company over who exactly runs the company. In its announcement, Bertelsmann said the Hilbers will now be chairman of the board.
"I have believed from the start that this deal was a valid and beneficial deal for Napster, the best direction for the company under the current circumstances," said Hilbers in the Bertelsmann statement. "While this has been a very unusual week, I'm pleased that I and my colleagues can move forward and give our full attention to Napster's future."
According to sources within the company, dissident board members wanted to lessen Bertelsmann's hold on the company, but found no other partners willing to shore up the company's need for cash in the face of ongoing losses.
The once wildly popular Internet site -- shut down by court order -- has been straining under a weight of debt, boardroom bickering, executive defections and pressures from record companies.
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