At the annual general meeting at Mighty Kingdom’s King William Street head office on Wednesday, shareholders voted to boot the former ABC boss from her seat on the board.
Though proxy votes cast prior to the AGM were in the chair’s favour, those who attended the meeting yesterday afternoon sealed Guthrie’s fate. Of the 330 million votes cast, 54.11 per cent were against the chair’s re-election.
However, prior to votes being cast, Guthrie announced that irrespective of the result she would stand down as chair and director of the company by the end of March 2024.
Shareholders also voted against the adoption of the remuneration report – detailing executive pay – constituting a ‘first strike’ against the Mighty Kingdom board. If the company receives a second strike next year, shareholders will get the opportunity to spill the board.
The 50-plus strong contingent at the AGM included Mighty Kingdom’s former CEO and founder of the game company’s major shareholder Gamestar+, Shane Yeend. The outspoken entrepreneur met shareholders with popcorn served from a machine by a man dressed as a circus ringleader.
Mighty Kingdom shareholders were met with popcorn outside the company’s King William Street office before the AGM. Photo: David Simmons/InDaily.
Yeend earlier this month sent shareholders a nine-page letter calling for a vote against the chair’s re-election and the remuneration report.
That followed a Mighty Kingdom announcement that it had terminated a share subscription with Gamestar+, and came amid a strategic review of the business that’s considering a potential sale of the company.
It also followed the total deterioration of Mighty Kingdom’s market value. Since the company listed in April 2021 at a price of 30 cents per share implying a market capitalisation of $51 million, the company’s share price has fallen significantly. Shares are now worth just 1.9 cents, and the group’s market cap is $6.79 million.
Yesterday, Guthrie said the past year had been “challenging” for Mighty Kingdom and took responsibility “for the past unsustainable cash burn of the business”.
“We had an aggressive growth plan and made several investment decisions in an attempt to accelerate revenue,” Guthrie told shareholders.
“It has been an incredibly challenging few years and I thank you all for your patience and support over this period.
“I look forward to seeing Mighty Kingdom continue its journey to become the global games industry success story that led me to join the team.”
Guthrie also spoke about a strategic investment from Yeend’s Gamestar+. Announced in August 2022, Gamestar+ was to invest in the company and acquire a chunk of the firm too. In September, Mighty Kingdom alleged $2.1 million of the investment was outstanding and would be chased down by the company’s lawyers.
Yeend – who was CEO of Mighty Kingdom for just four months – has always maintained that the game developer was in breach of the share subscription agreement between the two parties 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”.
“It was anticipated that Mighty Kingdom had a much stronger and more sustainable future with a strategic investment from a company that could deliver new contracts directly with owners of intellectual property,” Guthrie said at the AGM.
“However, this relationship with Gamestar+ did not deliver either the industry expertise or the total payment agreed for those shares. 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.
“I am confident that we did all we could to finalise the Gamestar+ investment. The company is committed to pursue Gamestar+’s unpaid capital contributions on your behalf.”
When Guthrie opened the AGM up to questions, one shareholder asked about details of the share subscription agreement. Guthrie would not explain why Yeend was in breach of the SSA, and said the company had received “strong legal advice” that the $2.1 million was owed to Mighty Kingdom.
Guthrie also detailed that, “in spite of the failure of Gamestar+ to complete the transaction”, the company had seen a turnaround in fortunes.
“Your interim CEO, Simon Rabbitt and the leadership team, have delivered a comprehensive restructuring process,” she said.
“That has turned our financial performance around from a $6.9 million loss in the first half to a $1.7 million loss in the second half of the year with further improvements anticipated.
“Your management team delivered these huge improvements in a far tighter capital environment than anticipated, with our developer team focused on prioritising revenue generating projects and I wish to thank them and the entire Mighty Kingdom team for such great results in the circumstances.”
Guthrie also left the door open for further discussions with Yeend’s Gamestar+, which in its letter to shareholders earlier this month claimed it would file for an extraordinary general meeting following the AGM to replace the entire board.
“The need for a strategic partner remains however and to this end we have commenced a strategic review of the business,” she said.
“Should Gamestar+ or Mr Yeend put another proposal on the table, your board is obligated to consider that as part of its strategic review.”
The spat between Yeend and Mighty Kingdom’s leadership has led to assertions from the former that he was “in detailed discussion to potentially merge Gamestar+ into Mighty Kingdom and take control”.
“It would be our intention to change the name of the listed entity to Gamestar and use that as a roll up vehicle to acquire other companies that will expedite the growth of Gamestar,” Yeend’s letter to Gamestar+ shareholders, republished by Mighty Kingdom in an ASX announcement, reads.
“We believe we are close to successfully completing the transaction despite inaccurate media reports.”
But Guthrie yesterday told shareholders that “Mighty Kindom is not in any discussions with Gamestar+ regarding a merger or change of control transaction nor has it ever been in the past”.
Of the other resolutions voted on by shareholders at the AGM, just three were carried including issuing shares to interim CEO Rabbitt, chief technology officer Grant Osborne and employees.
Resolutions to issue shares to Guthrie were withdrawn prior to the AGM’s commencement.
In early trade today, shares in Mighty Kingdom were up by 11.76 per cent.