MONTREAL — In the fantasy fiction of The Lord of the Rings author J.R.R. Tolkien, Narsil was a legendary sword. Shattered in a long-ago battle against evil, it is reforged by an Elvish smith and wielded anew by a man who becomes a king. Project Narsil, however, was the name given to an attempt by a group of Canadian investors to buy one of the largest networks of pornographic websites in the world.

Launched this past summer and led by Chuck Rifici, a former Liberal Party volunteer CFO who went on to make a lot of money in legal weed, Project Narsil was shrouded in a fog worthy of Tolkien’s Misty Mountains and a non-disclosure agreement that one prospective investor described to me as “one of the more vicious I’ve ever seen.” Though the proposed deal ultimately fell through, Project Narsil offers a glimpse at how, even amid media controversy and legal threats, some investors saw the Montreal-founded, Luxembourg-based technology company MindGeek—owner of the likes of Pornhub and Brazzers—as a lucrative opportunity.

I was able to have a gander at the pitch deck, which outlines Project Narsil’s three goals: 1) Acquire a company, which the deck identifies only as “Narsil,” but which sources confirmed was MindGeek 2) Restructure the company and rehabilitate its reputation, making it ripe for a sale or a merger with a SPAC; and 3) Get very rich in the process. “The acquisition target is one of the most recognized and undervalued brands in the adult entertainment and technology sector,” reads the pitch deck.

The execution would have involved a private equity firm that Rifici formed to pursue the acquisition, Bruinen Investments. (The name is another Tolkien reference, in this case a river in Middle-earth.) An archived version of the firm’s website said it was devoted to delivering “the true value of safe, legal, positive online experiences for adults,” and had lawyers, VC types and a former RCMP chief superintendent on the masthead. Finally, the offer: US$525 million for “Narsil,” which the deck called “one of the most recognized and undervalued brands in the adult entertainment and technology sector.” 

That proposition—equivalent to just “2.8 times [MindGeek’s] 2020 annual EBITDA,” according to the pitch deck—might reasonably be called a stink bid, and for good reason. Though its marquee site, Pornhub, garners more traffic than LinkedIn and rivals that of Netflix, according to internet data site Similarweb, MindGeek was thrown into the reputational ringer in December 2020 after New York Times columnist Nicholas Kristof wrote that Pornhub was “infested with rape videos.” Visa and Mastercard dropped payment services to the site. Lawsuits from victims piled up. Pornhub cried witch hunt—though it nonetheless expunged millions of videos, banned downloads and restricted uploading capacity to approved content providers.

According to the pitch deck, this had a detrimental effect on MindGeek’s bottom line. Visa and Mastercard’s exit resulted in a “total revenue loss from premium and live services,” while Pornhub’s content purge resulted in a 10 per cent drop in daily traffic per month. “These effects combined have caused revenue to drop by 40 per cent and EBITDA to drop by 70 per cent from November’s peak,” it reads. 

Rifici et al. saw a business opportunity in pulling MindGeek from its moral and economic morass. “Bruinen will benefit from emerging business models in the adult space,” reads the pitch deck. “Mainstream brands are warming to the opportunity of ethical adult entertainment as a new frontier.” In order to burnish this blue-chip sheen, Bruinen recruited a roster of prominent investor types, including media executive Sophie Watts as an advisor and former Inovia venture capitalist Malcolm Katz-Larson as principal, according to the archived version of its site. Former RCMP drug czar Derek Ogden, a colleague of Rifici’s at National Access Cannabis, was Bruinen’s “director of global law enforcement relations.” 

And in case potential investors didn’t get the point, Bruinen festooned a page of the pitch deck with the logos of 17 prominent companies and organizations for whom the Bruinen staff had previously worked, including Canopy Growth, the RCMP, Amazon, Cisco, Deutsche Bank, Nokia, the Liberal Party of Canada and Inovia Capital. Investors were further enticed by the monetary upside of investing in the giant online pornographer. Bruinen projected that under its ownership, MindGeek would have EBITDA of US$180 million in 2022, increasing to US$296 million in 2026.

At first, Project Narsil seemed to be going great guns. On June 13, Bruinen chief of staff Sang Trinh sent an email to potential investors with the subject line “Project Narsil.” 

“The Bruinen team is in the final stages of acquiring most of the assets of MindGeek, including Pornhub, one of the world’s most popular online destinations,” Trinh wrote, according to a copy of the email I obtained, adding Bruinen was “raising $100 million in equity and a $500-million pre-money valuation.” He said investments would be made through a “flow-through limited partnership.” That way, “your partnership with this business is not publicly disclosed nor accessible” in public filings “as we seek a Nasdaq listing on an expedited basis.”

Then … nothing. Bruinen’s website, which had been a jargon-heavy thing seemingly purpose-built to impress potential MindGeek investors, was stripped nearly bare sometime between August and now. A Globe and Mail report late that month said MindGeek’s owners—Montrealers Feras Antoon and David Tassillo, along with shadowy Austrian Bernd Bergmair, a.k.a. Bernard Bergemar—rejected Bruinen’s entreaties, along with those of two other Canadian investor groups. And as my colleague Jon Victor recently reported, MindGeek’s owners are still cashing in. Its ultimate parent company paid out at least US$11.4 million in dividends to its owners in 2020, though the actual figure is likely much higher.

Rifici didn’t respond to my text or email. Neither Antoon or Tassillo responded to a request for comment.

I also got in contact with a few of the entities whose logos Bruinen used in its pitch deck. They were none too pleased. “The party has no involvement with the business that you have referenced,” Liberal Party spokesperson Matteo Rossi told me via email. “The RCMP does not support the use of its name or image being portrayed in any way that could give the impression that the RCMP is advertising or endorsing a private individual or business,” RCMP spokesperson Robin Percival wrote to me. And Inovia CEO Chris Arsenault emailed to tell me “The use of our logo by Bruinen Investments was unbeknownst to us and without our permission,” noting that “we are vehemently against investing in adult content.”

One last thing: Bruinen ended its pitch to potential MindGeek investors not with another Lord of the Rings allusion, but with a quote from former U.S. Supreme Court justice Potter Stewart. “Ethics is knowing the difference between what you have the right to do and what is right to do,” it reads—words Bruinen thought germane in its attempt to acquire a disgraced-but-profitable porn company.

Of course, Stewart is better known for birthing one of the most famous lines in U.S. Supreme Court history. In 1964, the court heard a case involving an Ohio theatre owner convicted of having shown The Lovers, Louis Malle’s 1958 tale of restless bourgeois sexuality. In a concurring opinion striking down the obscenity charge, Stewart riffed on the difficulty of what exactly constitutes hardcore pornography. “I know it when I see it,” he wrote.