Mighty Kingdom brings in lawyers in $2.1m funds fight with former CEO Shane Yeend’s company

Games company Mighty Kingdom has appointed specialist lawyers in its bid to get former chief executive Shane Yeend’s company Gamestar to pay $2.1m it says is owed.

Gamestar founder and former Mighty Kingdom chief executive Shane Yeend.

Game developer Mighty Kingdom has appointed specialist dispute resolution lawyers in its bid to extract $2.1m in capital raise payments it says it is owed by a company controlled by former chief executive Shane Yeend.

Mr Yeend’s resignation from the top role at the Adelaide-based game development company was announced to the ASX on September 1, a day after he told The Australian he had quit the company.

Since that time non-executive director Melanie Fletcher from London-based, global entertainment group Done and Dusted has also resigned from the company, which is chaired by former ABC managing director Michelle Guthrie.

Former ABC managing director Michelle Guthrie.

Mighty Kingdom’s annual results, released on August 31, made no reference to Mr Yeend at all but did include a note to the financial statements which indicated a $2.3m debt was owed by his company Gamestar Studios.

The money owed by Mr Yeend’s company relates to a capital raising announced more than a year ago, when Mighty Kingdom told the ASX it had received commitments for a $7m placement, allowing the company to restructure following heavy losses since listing in April, 2021.

Mr Yeend’s Gamestar Interactive Inc was brought on to the share register as part of the raise, with Mighty Kingdom telling the ASX at the time that Gamestar had “closed its first seed round at a $57.2m valuation in November, 2021’’.

Mr Yeend told The Australian that Gamestar has so far paid $2m towards its expected contribution to the capital raise.

However $2.1m remains outstanding, Mighty Kingdom says, despite all necessary conditions for payment having been met.

“As a significant portion of these funds have not been forthcoming despite efforts to resolve the delays, Mighty Kingdom have appointed LK Law, specialist dispute resolution advisors, in conjunction with its existing financial and legal advisors to pursue and expedite an outcome that maximises value for the company’s shareholders,’’ Mighty Kingdom told the ASX on Monday.

“Noting the company’s ASX Release of August 25, 2023, where it announced an R&D prepayment facility with Radium Capital for circa $1.2m, Mighty Kingdom is in a position to finance its ongoing business operations without immediate recourse to the Gamestar settlement moneys.’’

Following Mr Yeend’s Gamestar participating in the capital raise in August last year, he was appointed chief executive in May, with a nominal “consulting fee” of $1 to be paid, and subject to shareholder approval, 12 million share options with a strike price of 8c with a two year expiry term.

“I believe Mighty Kingdom is the perfect vehicle to grow a global gaming business,’’ he said at the time.

Mr Yeend said in a statement on Monday that it was Mighty Kingdom itself which was in beach of the conditions surrounding the capital raise.

“The current tranche outstanding they are in breach of nearly all the clauses.

“Our monies were conditional with heavy conditions.

“Our position is entirely justified based on an agreement with the investment bankers and chair that took our money based on a breakeven 22/23 year (hence the tranches) and they lost another more than $9m.

“Hence why I forced myself in as CEO for $1 a year in Jan to try and cut costs which have been coming down.

“I have tried to get this deal completed for the sake of the game industry in Adelaide in good faith at all times.’’

Mighty Kingdom shares last traded at 1.3c, valuing the company at $4.9m. The company floated at an issue price of 30c in 2021 after raising $18m.

Originally published as Mighty Kingdom brings in lawyers in $2.1m funds fight with former CEO Shane Yeend’s company