Game over: Shane Yeend sells out of Mighty Kingdom

Entrepreneur Shane Yeend has sold out of game developer Mighty Kingdom, bringing to an end an acrimonious battle for control of the company.

Adelaide-based entrepreneur Shane Yeend has sold out of game developer Mighty Kingdom. Picture: AAP

Shane Yeend has sold out of game developer Mighty Kingdom, bringing to an end an acrimonious battle for control of the company that claimed the scalp of high-profile chair Michelle Guthrie.

The saga began in late 2022, when Mr Yeend, an Adelaide-based entrepreneur, agreed to be the cornerstone investor in a $7m Mighty Kingdom capital raising, with his companies including Imagination Entertainment and Gamestar Studios agreeing to tip in $4m at 3.5c per share.

The company’s had listed less than 18 months earlier, raising $18m in new shares priced at 30c.

It was burning through cash rapidly, however, with its shares in free fall since listing.

The money brought in through the August 2022 capital raising was meant to help right the ship, along with three new non-executive directors. The company at the time talked up Mr Yeend’s almost four decades of experience in the board game and digital game sector internationally, and touted the connections he could bring to the company, along with the cash ­injection.

By January 2023, the company had turfed founder and managing director Phil Mayes, and installed Mr Yeend as chief executive on a nominal salary.

“I am excited by the opportunity to lead the Mighty Kingdom team, drive future growth, and take the company to the next phase of its success,’’ he said in the company’s statement to the ASX at the time.

“I intend to work with the amazing Mighty Kingdom team to produce world-class product, and make Mighty Kingdom the number one games developer in ­Australia.’’

Trouble was brewing behind the scenes, however. Mr Yeend’s companies had not paid for the second tranche of Mighty Kingdom shares they had committed to buying, worth about $2m. And they never would.

The company’s former chair Michelle Guthrie told the annual general meeting in November last year that Mr Yeend had told them the companies did not have the money to fulfil their obligations.

“Once it became apparent that Gamestar did not have the available funds to settle, a position confirmed by Mr Yeend to multiple parties, we had no choice but to terminate the share subscription agreement,’’ Ms Guthrie told the meeting.

Former Mighty Kingdom chair Michelle Guthrie.

Mr Yeend has consistently denied this version of events and in a statement to The Australian last year denied that his companies lacked the funds to complete the deal, saying it was Mighty Kingdom’s failure to meet conditions which led to the non-payment.

The cracks in the relationship started to become apparent in late August last year, when the company released its financial results without including Mr Yeend’s name in the ASX release.

His name was also not mentioned once in the company’s financial report.

The report did mention a “related party receivable” of $2.28m owed by Gamestar Studios for 65,371,429 shares.

“As the company announced to the market on June 14, 2023, all conditions to that payment have been met, which created an unconditional right to receive payment,’’ the company says.

“The company has been expecting settlement of that commitment. On July 20, 2023, the company received $200,000 as partial settlement of this receivable. The company is currently in the process of resolving the timing of the settlement of the balance of payment from Gamestar Studios.

“Based on the information available to the company, the company is not aware of any reason why it is not able to reasonably form the view that the outstanding amount will be received by the company in full.’’

Mr Yeend is the sole director of Gamestar Studios, which is wholly owned by Gamestar Interactive. Mr Yeend that day told The Australian he had already quit the chief executive role. Mighty Kingdom announced the same the following day, subsequent to the publication of an article to that effect.

The relationship fell apart completely from then, with Mighty Kingdom hiring lawyers in a bid to recoup the $2m it said it was owed.

For his part Mr Yeend launched a very public campaign to oust Ms Guthrie, the former managing director of the ABC, and her fellow directors from the board, to be replaced with Mr Yeend and his allies.

This included setting up a dedicated website and Facebook group with the intent to rouse shareholders to vote Ms Guthrie out.

The attacks included references to a November 2018 letter from former ABC chair Justin Milne to a Senate inquiry into political interference at the ABC, which states: “After very careful consideration by the Board, Ms Guthrie was terminated due to poor leadership skills leading to a loss of confidence and trust in her by the Board of the ABC and many of its employees.’’

Ms Guthrie was terminated in mid-2018, after refusing to resign. A confidential settlement was reached after she lodged an unfair dismissal claim over her then-$900,000 a year role.

Prior to the Mighty Kingdom AGM in November last year, a nine-page letter was also posted to LinkedIn setting out the case for installing a new board and management, and videos were posted to social media of Mr Yeend stuffing envelopes to send to shareholders.

The letter to shareholders urged them to vote to replace the board and management with Mr Yeend’s preferred candidate, Sam White, a former executive at fellow game developer Halfbrick.

In relation to the outstanding $2m from the capital raise, Mr Yeend’s letter said “we … have substantial claims against the company for breach of the agreement’’.

He said Gamestar was also suing Mighty Kingdom for $4.5m for lost sales due to the non-delivery of a game it commissioned – a game Mighty Kingdom said Gamestar did not pay for.

If Gamestar was successful in ousting the board, Mr Yeend said it would hold an extraordinary general meeting and appoint a new board, plus a “world class advisory board”, provide an “instant $2m cash injection with zero dilution’’ and would drop its legal actions.

Ms Guthrie told The Australian last year that the company was confident that Gamestar owed Mighty Kingdom $2.4m.

Mr Yeend and his supporters managed to push Ms Guthrie off the board at the AGM.

But by late December a well-credentialed group of gaming executives had agreed to join Mighty Kingdom and back it financially.

Mr Yeend’s ambitions were thwarted, with seven resolutions to replace Mighty Kingdom’s directors rejected by shareholders.

It is now worth just $1.98m.