Cash4Gold Exploring Sale of the Company

Cash4Gold has traditionally bought gold from consumers, but now it may be seeking a buyer for itself.

Cash4Gold, the Pompano Beach, Fla.-based by-mail gold-buying service famed for its once-ubiquitous, often-parodied ads, has retained Phoenix Capital Resources to evaluate the company’s strategic options, including a potential sale of the company, a Phoenix press release says.

The news comes as a lawsuit against the company from its former ad agency raises questions about the company’s financial condition.

Court papers filed by Euro RSCG Direct Response include a copy of a purported offering memorandum from Phoenix, which states that the company’s revenue fell substantially in 2010 due to “increased competition, new ineffective market advertising strategies and cash flow issues.”

The memorandum further states that when a portion of the company was sold in 2008 to professional investment firms, they changed the direct marketing commercials “which current management believe[s] caused a decrease in volume.”

The company also says it spent “millions” defending itself against class action lawsuits.

The suit from the marketing firm, filed in U.S. District Court for the Southern District of Florida, claims Cash4Gold owes the company $2 million, including money for its highly publicized 2009 Superbowl ad.

A response filed Sept. 28 from Cash4Gold’s parent company, Green Bullion Financial Services, noted that the company had already paid Euro RSCG Direct Response $70 million, so the money owned amounts to “3.5 percent of the total amount invoiced to Green Bullion over a four year period.” The response notes that Green Bullion disputes some of the amounts being billed, and labeled the suit an “overreaching collection case.”

Cash4Gold did not respond to inquiries from JCK.

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