Former ABC boss Michelle Guthrie facing a fight to hang on to Mighty Kingdom chair role
A stoush over the control of a game development company has turned personal, with Michelle Guthrie’s tenure at the ABC being dragged out in a bid to unseat her as chair.
Attacks on former ABC managing director Michelle Guthrie’s performance while she was at the public broadcaster are part of a campaign to unseat her as chair of embattled Adelaide-based game development company Mighty Kingdom.
Ms Guthrie has been in the news this year as chair of start-up digital radio company Disrupt Radio. At the same time, Mighty Kingdom and its 30 per cent shareholder Gamestar, headed by entrepreneur Shane Yeend, are locked in a bitter battle for control of the company. It has burned through tens of millions of dollars since listing on the ASX in April 2021 after raising $18m at 30c a share. The stock closed at 2c on Friday.
Mr Yeend is adamant the company has been mismanaged, and has waged a concerted public campaign to topple the current board and management, with Ms Guthrie’s role firmly in his sights.
He has posted 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.
Gamestar emerged as a white knight for Mighty Kingdom just over a year ago, committing to tipping $4m into an emergency capital raise, which helped the company net $7m.
But about $2m of the $4m remains outstanding, with the parties disagreeing about whether conditions have been met for its full payment. Both have lawyered up in that fight. The company also says Gamestar owes it money for a game it developed, with those fees running to about $300,000.
While the capital raise issue simmered in the background, Mr Yeend took the chief executive role at Mighty Kingdom in May on a nominal $1 salary, before quitting in late August.
A nine-page letter has been posted to LinkedIn setting out the case for installing a new board and management, and videos have been posted to social media of Mr Yeend stuffing envelopes to send to shareholders, with voting material.
The letter to shareholders urges them to vote to replace the board and management with his preferred candidate, Sam White, a former executive at fellow game developer Halfbrick. “If we are successful at the EGM (extraordinary general meeting) 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.’’
To date, Mighty Kingdom has not announced it will hold an EGM, nor that one has been requisitioned.
In relation to the outstanding $2m from the capital raise, Mr Yeend’s letter says “we … have substantial claims against the company for breach of the agreement’’.
He says Gamestar is also suing Mighty Kingdom for $4.5m for lost sales due to the non-delivery of the game it commissioned — the same game Mighty Kingdom says Gamestar did not pay for.
If Gamestar is successful in ousting the board, Mr Yeend says it would appoint a new board, and a “world class advisory board”, provide an “instant $2m cash injection with zero dilution’’ and would drop its legal actions.
A Mighty Kingdom Shareholders Facebook site has been set up by a Jeremy Schulz whose bio says he is a corporate investor.
A reverse image search indicates Mr Schulz’s photograph is a stock image of a businessman wearing a suit.
Mr Schulz was contacted for comment but did not reply
A discussion thread on stocks gossip site Hotcopper has also been set up, with the topic: “Shane Yeend saving Mighty Kingdom’’, while Mr Yeend has also set up a website setting out his grievances against the company’s board.
Mr Yeend has said the company will “need security’’ at the upcoming annual meeting and when The Australian asked him what he mean. he said: “As in lots of people intending to come as I talk to shareholders daily who have lost their super etc,’’ he said via text message.
“Think about 100 at a guess. Not your normal AGM.’’
Mr Yeend said a Section 249 notice should be issued on Friday, calling an EGM for the company, which would be a “much better story if your (sic) interested in the facts’’.
A section 249 notice is yet to be lodged.
Ms Guthrie told The Australian, the company was confident that Gamestar owed Mighty Kingdom $2.4m, made up of slightly more than $2m from the capital raise, with the rest fees for work.
In terms of the company’s future, she said there had been a large reduction in cash burn from the second half of the last financial year to the recent first half, under new boss Simon Rabbitt and his management team.
“So I feel very confident in the ability of the management team to continue to drive both efficiency and growth on the top line,’’ she said.
The company’s annual meeting is scheduled for November 29.
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