When we last checked in on Premier, the acquisition of Dinoking had been completed and Daoping Bao was now the chairman. In a recent filing to the U.S. Securities & Exchange Commission, Adam Bradley reported a letter sent to the Premier board of directors. As his firm has over 5% interest in the company, he expresses what he expects from the new management.
“I believed then that fixing the current operations and monetizing the assets would be difficult but achievable. However, I feel that the current muddled strategy, a lack of progress with execution, inadequate reporting, and poor communication to shareholders have driven Premier off track. I believe these factors are also contributing to the severe depression in the market valuation of our company. It is my objective to drive accountability and at the same time assist leadership in restoring value through a more effective strategy.”
He wants the board to end unprofitable exhibits that have resulted in lost revenue and impacting the company’s ability to have sustained profits. He argues that getting rid of expensive leases, though a challenge, ought to be pursued. And he hopes to work with the company to achieve these ends.
The letter is part of the 13D filing made by AJB Capital to the U.S Securities & Exchange Commission.
A recent 13-D filing by Premier discloses the identities of the merger group and the terms they will operate under. Missing is the disclosure information for Mandra Forestry Limited, a British Virgin Islands registered company, that owns 8.3% of the stock. What is missing is the source of their funds. “We have requested on numerous occasions but not received confirmation from Mandra Forestry Limited” states the filing. Perhaps it means something or perhaps not. It is curious that this information has not been forthcoming from them.
Premier Exhibitions has filed a required Form 8-K with the U.S. Securities and Exchange Commission detailing the loan agreement. The total loan sum is $5m and requires the company take out $1m before 10 Dec 2015. A second draw of $1m is available upon written notice before 18 Dec 2015. And a third draw of $1m can be obtained before 31 Dec 2015. An additional $2m is available but only at the discretion of the lenders. The unpaid amount accrues a 12% annual interest rate and can be prepaid at any time (but requires you pay 105% of principal amount). Yanzi Gao, agent for the lenders, signed the agreement. According to the papers filed with the agency, the names of the lenders are: Jihe Zhang, High Nature Holdings Limited, and Lange Feng. Repayment is required by 1 Aug 2017.
With the shareholder approval on 29 Oct 2015, Premier Exhibitions has announced it has executed all the necessary agreements and that the merger is now complete. The Board Of Directors has appointed Daoping Bao as Executive Chairman Of The Board, President, and Chief Executive Officer of the company. The Board of Directors has increased to seven members and four new directors were appointed. Shareholders are hoping the new leadership will turn things around for Premier.
Source: Premier Exhibitions, Inc. Announces Closing Of Merger With Dinoking Tech Inc. (Globe Newswire [Press Release],2 Nov 2015)
The expected approval of the Dinoking merger with Premier Exhibitions took place on 29 Oct 2015. According to the press release, the merger transaction will take place in the next few days. Upon merger completion, Daoping Bao will be appointed the president and chief executive officer of the company. Some shareholders have expressed the hope that Bao will fix the problems caused by poor management of the company.
Premier Exhibitions, which owns RMS TItanic Inc and Titanic:The Artifact Exhibition, has reported its second quarter 2016 results. Here is some information from that statement:
Gross profit decreased to $1.1 million from $3.0 million in last year’s second fiscal quarter while gross margins fell to 16.1% from 36.5% in the prior year period. The decrease in gross profit is primarily due to the decrease in revenues and an increase in production and marketing expenses related to our New York City location.
Total exhibition days decreased 28.4% to 1,076 as compared to 1,503 in the second fiscal quarter of 2015.
Average attendance per exhibition day decreased 26.7% to 366 compared to 499 in last year’s second fiscal quarter. Average ticket prices for semi-permanent and partner presented exhibitions decreased 4.1% to $16.10 from $16.79 in the second quarter of fiscal 2015.
Average attendance per exhibition day for semi-permanent exhibitions was 319 compared to 344 in the prior year period. Average ticket prices for semi-permanent exhibitions increased 3.7% to $22.20 from $21.40 in the second quarter of fiscal 2015.
Company president Michael Little stated that they need additional financing to keep going. “We have a working capital deficit of $1.4 million excluding the convertible debt of $13.5 million, which is included in the short term portion of note payable on the balance sheet.” Which is why they desperately want to merge with Dinoking (proxies have been mailed out for the special 29 Oct 15 meeting).
Little argues the merger will allow them to get additional capital ($5m) to fund ongoing operations and to have the company “break-even” in its operations. Otherwise he warns:
If we are unable to obtain additional financing, we will likely not be able to continue operations as they are currently anticipated or at all.
Of course there is that lawsuit out there by Mark Sellers to enforce the previous merger agreement, which could throw all plans out the window if it survives early judicial review.
The South China Morning Post is reporting that Linda Ching, the daughter of Ching Mo Yeung who is accused of financial crimes by China, is no longer part of the Dinoking deal and replaced by another investor. Her investment was revealed in documents filed with the British Columbia Securities Commission and the US Securities and Exchange Commission. However Dinoking has informed Premier that the funding note involved was replaced by another investor on 6 Jul 2015.
Interestingly the three members of the finance group that Dinoking put together are difficult to verify. The Post was unable to confirm one identity and two are firms in the British Virgin Islands making it impossible to learn the owners due to secrecy laws.
Okay so we have investors whose names and identities are deliberately being kept secret. And a connection to a figure seeking refugee status in Canada who the Chinese say committed financial crimes (and also being sought by Interpol as well). Does make one wonder if the motive behind the Seller’s lawsuit is buyers remorse. And this is a way to scuttle the deal. Well just a thought.
A lawsuit by Mark Sellers, former chairman of Premier Exhibitions and through Sellers Capital owns 15.4 million shares in the company, is suing George Wight Jr. and his companies, Armada Enterprises and Armada Group of Florida. In 2014, Sellers agreed to sell his majority stake in Premier for $16.2 million. Sellers alleges Wight reneged on the deal. And he also alleges Wight misled the Premier board and shareholders about the money available to complete the deal. Sellers is requesting that a federal judge force Wight to follow through with original deal terms, seeks more than $12.5 million in damages. Currently Premier is the process of merging with Dinoking Tech. Dinoking exhibits animatronic dinosaurs. The deal is yet to be approved by the shareholders (to be voted on in October) and would allow Premier to acquire all shares of Dinoking for $6.4 million and its principal shareholder, Daoping Bao, will take control of the company.
Needless to say, this is going to cause some problems for the Dinoking merger. If the lawsuit succeeds, it would force Wight to consummate the original deal with Sellers. Not that everyone is entirely convinced of the Dinoking deal. There are nagging questions about Dinoking and its capital sourcing. And Andrew Shapiro who is president of Lawndale Capital Management with a five percent stake is quoted as saying:
Similarly, if new, more skilled board and management were assembled, Lawndale might be willing to participate in a rights offering to all shareholders to raise additional equity supporting a debt refinancing that together might prove to be a superior bid to that of Dinoking and its questionable capital sourcing.
1. It was announced just before the Easter holiday that Premier Exhibitions is merging with Dinoking, a Canadian company that produces the “Dinosaurs Unearthed” exhibit. Premier will acquire all outstanding shares and its principal shareholder Daoping Bao will take over as president of the combined company. The deal is subject to shareholder approval in August. According to terms of the deal, Dinoking will become a subsidiary with 47 percent of the voting stock. Now we understand why there was a reverse stock split.
Source: Merger On Deck For Titanic Exhibitor Connected To Hopcat Owner Mark Sellers(6 April 2015, Mlive.com)
2 Folks who live in Killough in Northern Ireland are not happy with plans to modernize the lighthouse at St John’s Point. The lighthouse uses a 6 ton lamp with mercury to light the way for seafarers but authorities want to replace it with an LED lamp. Though the light itself is automatic, its mercury is a cause for a concern. So it must go even though it poses no harm to anyone since the light is atop the lighthouse and the only people who might be at risk would be the occasional person doing routine maintenance. Locals do not want an ugly LED lamp in the lighthouse that once saw Titanic pass by. Ellen Peter says: “If that were to go, all you would have would be a thing like a bicycle light or an airport landing light.”
Source: Campaign To Save Titanic’s Guiding Light(5 Apr 2015,Sky News)