Mighty Kingdom shareholders reject bid by Shane Yeend to overthrow board

Shareholders of embattled game developer Mighty Kingdom have rejected a bid by activist shareholder Shane Yeend to overthrow the company’s board.

Adelaide businessman Shane Yeend. Picture: AAP Image/Morgan Sette

Shareholders of embattled video game developer Mighty Kingdom have rejected a bid by activist major shareholder Shane Yeend to overthrow the company’s board.

At an extraordinary general meeting held in Adelaide on Friday, shareholders voted against Mr Yeend’s proposal to install his hand-picked team of directors, including himself, to replace the existing board, which is promising its own leadership shake up in a bid to turn around the company’s fortunes.

Friday’s vote potentially brings to an end a bitter battle for control of Mighty Kingdom, whose shares have slumped to just 1.7c, down from a listing price of 30c in April 2021.

All seven resolutions to replace Mighty Kingdom’s directors, including chairman David Butorac and non-executive director Ian Hogg, were rejected by shareholders.

Mr Butorac said the results would enable the company to move forward with a new strategic plan.

“I don’t consider this as a win - I see it as a strong vote of confidence in the business and its future direction,” he said.

“The investors that are coming onboard, both in the guise of the directors that will join the board but also the investors that they will bring to the table, are very games experienced, and it will provide the impetus that Mighty Kingdom needs to stay in the ground-breaking area of Australian games development.

“We’re very excited about the future. There’s still work to be done to make certain that we can achieve the financial results that the company deserves, and the valuation it deserves, because it’s currently significantly undervalued due to the disruption that’s been going on.”

As part of the company’s plan to revive its fortunes, the Mighty Kingdom board announced in December that it had signed a letter of intent to bring on a new board and management team, including a high-powered group of gaming experts who would help fund the company.

The proposed new board members - Mark Aubrey, David Yin and Chris Whiteman - have significant gaming experience, with Mr Aubrey heading up Activision Blizzard Asia Pacific for more than seven years and Mr Yin a former chief executive of gaming company Storms which was acquired by iCandy in 2022. Mr Whiteman is a director of Hong Kong-Based Animoca Brands, which is valued at more than $5bn.

An initial $726,000 was raised through the issue of convertible notes to investors including the proposed new directors ahead of plans for a larger capital raise.

Mighty Kingdom previously said it expected to appoint the proposed new directors by January 15, before Friday’s meeting, but that didn’t eventuate.

The appointments are now likely to happen next week, ahead of another extraordinary general meeting in late February, where shareholders will be given the chance to consider plans for a new strategy and capital raise.

Before Friday’s meeting Mr Yeend, who controls a 28.5 per cent stake in Mighty Kingdom through his companies Imagination Entertainment and Gamestar Studios, described the board’s plan as “another list of vague promises”.

“They claim to have uncovered some part time former games executives … who together with the board magically promise to raise millions in funding,” he wrote in a letter to shareholders on Monday.

“Yet absolutely no factual detail about amounts, the dilution impact on shareholders, deadlines, etc. Simply another ‘nothing burger’ served up by the board and management.”

Mr Yeend did not return calls on Friday.

Mighty Kingdom staff had earlier threatened to quit the company had Mr Yeend succeeded in seizing control of the company’s board.

About 95 per cent of employees who responded to an internal poll said they “would not feel comfortable to remain at Mighty Kingdom” had Mr Yeend’s leadership team been installed.

They issued a letter ahead of Friday’s vote, saying the businessman’s attempts to seize control of the board had “cast a dark shadow over our beloved workplace”.

“We’re the team that has poured our hearts and souls into making Mighty Kingdom the incredible place it is today, and we’re deeply concerned everything we’ve built might crumble this week,” they wrote.

“Our current leadership, under the guidance of individuals like Simon Rabbit and others, has brought about positive changes that have not only shaped the trajectory of Mighty Kingdom but have also revitalised our spirits.

“The threat of an exodus of talent is real, and it’s not an idle warning. It’s a genuine expression of our collective dismay and unwillingness to work in an environment that does not align with the values and culture we have come to cherish.”

The staff said they were particularly concerned about “the return of Shane Yeend” who was the company’s chief executive for a brief period last year.

The Adelaide businessman’s battle with Mighty Kingdom in recent months stems from a controversial $7m capital raise in 2022, into which his company Gamestar committed to putting $4m.

About half of that money was never paid, with Mr Yeend claiming the conditions under the agreement were not met.

The Takeovers Panel in mid-December said it had accepted undertakings from Mr Yeend and related entities under which the shares would be bought back by Mighty Kingdom for no consideration and cancelled.

Since his resignation as chief executive, he has been agitating for change in the boardroom, and was successful late last year in rallying shareholders against former chair Michelle Guthrie.

Ms Guthrie, a former managing director at ABC, was ousted at the company’s annual meeting in November, where the company’s remuneration report also received an overwhelming protest vote.

As part of his failed bid to take control in the boardroom, Mr Yeend was proposing the appointment of a new managing director (described as a “female CEO gaming tech veteran of 25 years”), while promising to “cut costs immediately to zero cash burn within seven days”.

However each of his proposed directors, including Enterprise Corporation managing director Roseanne Healy, Middleton Group managing director Keith Middleton and investment advisor Boris Patkin, all failed in their bid to be appointed to the board on Friday.

Mighty Kingdom listed at 30c in April 2021 after a $18m capital raise. The company lost $10.8m in its first year and $9.1m the following year, burdened by excessive staffing costs.

The company is now valued at just $8m.