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Mighty Kingdom to raise funds as it considers business sale

Embattled Adelaide video game company Mighty Kingdom is considering a “whole or partial divestment” of the business as it launches a $1 million capital raise.

Oct 17, 2023, updated Oct 17, 2023
Photo: Mighty Kingdom.

Photo: Mighty Kingdom.

Cerberus Advisory and Motus Legal have been appointed as financial and legal advisers to assist in facilitating a review process of the Mighty Kingdom business.

In an ASX statement, the company said it was “considering all options with respect to its business including but not limited to, a whole or partial divestment, joint venture arrangement or a strategic investment into the company to further growth and development”.

“The company has not made a decision at this stage with respect to terms and deal structure that it is prepared to consider and therefore makes no assurances that a transaction will eventuate,” said Mighty Kingdom, which was established in 2010 and created a games development hub in the CBD seven years later aided by $2 million of state government funding.

The company said the strategic review was implemented following “the receipt of several unsolicited enquiries from corporate and other entities expressing interest in the company”.

In conjunction with the announcement, the company said it would raise $1 million from shareholders for “working capital requirements while the company continues to pursue new, higher-return opportunities”.

Under the placement, 100 million new shares at a price of 1 cent per share will be issued – a slight discount on the current $0.011 share price.

Mighty Kingdom chair Michelle Guthrie – the former ABC CEO – said she intended to participate in the placement, as will interim CEO Simon Rabbitt who was appointed earlier this month to replace former CEO Shane Yeend.

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In September, the games developer hired lawyers to chase more than $2 million in settlement funds which is alleged were outstanding from Gamestar Studios – a company founded by Yeend and Mighty Kingdom’s largest shareholder.

In a statement sent to InDaily at the time, 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”.

Yeend was appointed as CEO on 3 May 2023, and resigned just four months later without much explanation from the Mighty Kingdom board. The company said it would “work with Mr Yeend in his role as chairman and CEO of Gamestar+ to resolve issues around outstanding obligations”.

Over the past two years, the company has been hit hard on the sharemarket due to the underperformance of its titles, and the Auditor-General was asked to review allegations about control of intellectual property and its 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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