Sent to all shareholders by former Mighty Kingdom CEO and current Gamestar Studios director Shane Yeend and posted on LinkedIn last night, the nine page letter calls on shareholders to vote against the re-election of former ABC boss Guthrie at the upcoming annual general meeting, and demands a board spill.
It comes after Mighty Kingdom announced it had terminated a share subscription agreement with Gamestar, and amid a strategic review of the business that’s considering a potential sale of the company.
Yeend’s letter places the blame for Mighty Kingdom’s poor performance at the feet of Guthrie who was sacked as boss of the national broadcaster back in 2018.
He is calling for shareholders to vote against her re-election at the AGM on 29 November. Gamestar also said it would file for an extraordinary general meeting “that will follow the AGM to replace the board”.
“As you would be painfully aware, the MKL share price provides ample evidence of these failings,” the letter said, in calling for a “globally experienced advisory board and management, capable of leading and adding to the value of this unique opportunity”.
“The business has lost circa $A35 million since listing which is nothing short of a complete disaster.”
Yeend’s letter suggested former Halfbrick VP and current Mighty Kingdom consultant Sam White – “the only person who has achieved and lead significant success in global gaming” – could take over from current interim chief executive Simon Rabbitt as CEO. Halfbrick is a Brisbane-based company that has seen success in the gaming industry with its titles Fruit Ninja and Jetpack Joyride.
Rabbitt was appointed in October one month after Shane Yeend stepped down as CEO of the company.
“If we are successful at the EGM that we will be calling later this week to replace the board, we will appoint Mr Sam White who has agreed to the CEO position of the existing studio,” Yeend said.
Gamestar claimed in the letter it had “secured and proposed a new independent ASX turn-around board with a world class advisory board of 10 exceptional individuals”. The letter did not detail who those 10 individuals would be.
However, it did detail to shareholders how Gamestar – which owns 32 per cent of Mighty Kingdom – intended to vote at the upcoming annual general meeting on Wednesday 29 November; against the adoption of the remuneration report and against the re-election of Michelle Guthrie.
Mighty Kingdom has been approached for comment regarding the letter. The video game developer did make an announcement to the ASX this morning, but it was about the receipt of a $1.8 million refund claim under the R&D Tax Incentive program and did not address Gamestar’s letter.
The release of the letter comes after Mighty Kingdom announced in late-October it had terminated its share subscription agreement with Yeend’s Gamestar Studios.
In addition, the game developer said it was still working with lawyers at LK Law to recover $2.1 million it alleged was outstanding from Gamestar.
The now-terminated share subscription agreement was entered into by Mighty Kingdom and Gamestar back in August 2022, which gave Yeend’s firm a major chunk of the games company.
In a statement sent to InDaily in September, Yeend alleged Mighty Kingdom was in breach of its share subscription agreement with Gamestar Studios and that he had been trying to “get this deal completed for the sake of the game industry in Adelaide in good faith at all times”.
Following the appointment of LK Law, Mighty Kingdom named Simon Rabbitt as the company’s interim CEO.
Founded in 2010, Mighty Kingdom predominately makes licenced video games for mobile including Star Trek Lower Decks: The Badgey Directive, Conan Chop Chop and Gabby’s Dollhouse.
Aided by $2 million of state government funding, the company established a games development hub in the Adelaide CBD in 2017.
The business has been hit hard on the share market over the past two years due to the underperformance of its titles, and in 2021 the Auditor-General was asked to review allegations about control of intellectual property and the company’s use of $480,000 in government funds.
The firm laid off an undisclosed number of staff about a year ago following ‘disappointing’ results, which also led to a change in leadership with founder and CEO Phillip Mayes stepping down in January this year.
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