Mutiny at Premier Exhibitions
Atlanta Business Chronicle - by J. Scott Trubey Staff Writer
An investor in the Atlanta company staging the Titanic Aquatic exhibit is fighting to get control of what it claims is a sinking ship.
Chicago-based Sellers Capital LLC, which owns a 16 percent stake in Premier Exhibitions Inc., wants Premier founder and CEO Arnie Geller out and it’s forcing a vote among shareholders to appoint four new members to the company’s board at its 2009 annual meeting.
In addition to Titanic Aquatic, which is now at the Georgia Aquarium, Premier stages the controversial Bodies: The Exhibition as well as Dialog in the Dark.
Sellers Capital claims Geller has mismanaged Premier (Nasdaq: PRXI) causing a precipitous drop in revenues and stock price, all while taking an exorbitant salary for himself. It also alleges the company’s board has been “unwilling or unable to make the difficult decisions” to help right the listing company.
Sellers Capital’s principal, Mark A. Sellers III, is on Premier’s board.
“Since becoming a shareholder of the company on May 9, 2007, we have watched the company’s share price fall more than 96 percent from an all-time high of $18.62 to a recent low of $0.56,” Sellers Capital said in a Dec. 18 filing with the Securities and Exchange Commission. “We do not believe that this decline is due to the deteriorating economic environment, but is the result of poor financial performance of the company that we believe is due to poor management of the company’s business.”
Premier’s stock closed Dec. 30 at $1.17, down from an all-time high of $18.62 in July 2007. For the six months ended Aug. 31, 2008, it earned $27,000 on revenues of $30 million, compared with earnings during the same period the year before of nearly $9 million on revenues of $27.5 million.
The company’s board, in SEC filings, defends Geller’s track record and said that Sellers Capital asked Geller to retake control of the company only months ago.
Premier has been battered by recent legal and financial turmoil. It has been locked in long-term litigation over the artifacts in the Titanic exhibition, some of which are currently on display at the Georgia Aquarium. And its Bodies exhibit has been dogged by allegations the cadavers used in the exhibit are those of executed and tortured Chinese prisoners. The company settled a lawsuit with the state of New York over the matter last May.
In August, Geller, the company’s board chairman who served as Premier’s CEO from 1993-1995 and again from 1999-2007, assumed the role of CEO after former CEO Bruce Eskowitz resigned.
Since then, two top executives resigned in December, stating in SEC filings they were unable to work with Geller and other members of Premier’s management. Chief Financial Officer Harold Ingalls on Nov. 11 announced his intention to resign, after joining the company in February 2008.
In a letter to Premier’s board stating his plans to quit, Ingalls wrote that “The exercise of this provision is based upon my inability in my reasonable judgment to work with other members of the company’s senior management in furtherance of the company’s strategic objectives. In particular, my operating mode and organizational approach are not compatible with those of Arnie Geller.”
Kelli Kellar, Premier’s chief accounting officer, exited in December after 13 months. The company’s vice presidents of marketing and sponsorships have left after less than a year with Premier.
Sellers Capital has taken umbrage with Geller’s pay — $676,000 in salary and total compensation of $1.26 million — despite continuing losses. On Dec. 29, Premier said Geller would “voluntarily defer $345,000 of his annual salary as a cost-saving measure.”
This isn’t the first challenge to Premier’s management. In July, San Francisco-based Odyssey Value Advisors LLC sent a letter to Premier’s board demanding the company put itself up for sale or divest its assets in its Titanic exhibition series because of an inability to “generate any shareholder value for a prolonged period of time.”
Sellers Capital also wants Premier to sell its Titanic assets, which could be tricky because federal courts have ruled the company’s 5,500 artifacts valued at $100 million can’t be sold on the open market, leaving only museums as potential buyers.
In SEC filings, the company has rejected Sellers Capital’s move and vigorously defended Geller’s record as CEO. The company said a forced shift in leadership could “interfere with the long-term established relationships” in the hospitality industry and damage its ability to book shows.
Sellers remorse
Sellers Capital’s plan of action:
- Terminate Arnie Geller as CEO and chairman of the board.
- Name an interim CEO and search for a full-time replacement.
- Adjust compensation for executives.
- Evaluate and amend, if necessary, personnel policies.
- Develop a new strategic business plan for future product development.
- Cut fixed and variable costs.
- Evaluate event production capabilities at “all existing venues and close unprofitable” exhibits.
Source: Sellers Capital LLC
Reach Trubey at strubey@bizjournals.com.
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