Manu Kumaran, chairman of the board and CEO of Medient Studios Inc., says his conversion of personal loans into common stock at book value shows his confidence in the “studioplex” planned for Effingham County.
“Clearly we haven’t been successful in communicating our heritage, strengths and potential to the investor community and we recognize this fact,” Kumaran said in a news release issued Monday. “We will endeavor to correct this shortcoming and this decision to put my money where my mouth is, will hopefully underline my absolute commitment to Medient and our shareholders.”
The news release said $660,000 of personal debt that the company owes Kumaran will be converted into 10.3 million common shares at a purchase price of $0.064 per share.
The conversion was approved by the company’s board of directors. The shares will be issued once the increase in the company’s authorized shares has become effective.
The 10.3 million shares represent an 822-percent premium to the closing market price on Feb. 7, the news release said.
“My willingness to convert the entire amount of personal loans to the company at such a substantial premium to the market, should clearly illustrate to all investors both my confidence in the business and commitment to delivering shareholder value,” Kumaran said.
He said domestic and international release of the movie “Yellow” later this year will contribute significant revenue to Medient.
He also cited the strength of the company’s balance sheet, which had assets audited and valued at over $44 million with more than $16 million of net shareholder equity as of Sept. 30, 2013, “representing a book value well in excess of our current market cap.”
Kumaran said the senior management team has all accepted substantial cuts in pay, “inspired and motivated by the vision and objectives of Medient.”
Meanwhile, Matthew Mellon, who brought a well-known name to fundraising for the company, has resigned after 15 months as a member of Medient’s board of directors.
Mellon, who was named to the board on Nov. 5, 2012, resigned on Jan. 24.
Mellon “had to prioritize his time commitments on various projects and we decided that it was in the best interests of both parties that we part ways,” Kumaran said recently.
Kumaran said Mellon didn’t facilitate any financing for the company, Kumaran said, adding that a replacement for him on the board is being finalized.
Mellon did not immediately return a phone call or email asking for comment.
During an October visit to Effingham County, Mellon said he was working as a consultant, raising funds for Medient.
Mellon has been involved with such companies as Jimmy Choo, Harry’s of London, Hanley Mellon and Marquis Jets. In the private equity sector, he regularly consults with family offices and business owners in Europe, the Middle East, Asia and North America.
On Jan. 16, the Effingham Industrial Development Authority gave Medient 60 more days to revise its master plan and development schedule for a movie studio and entertainment project.
John Henry, the IDA CEO, said the extra time would not require a change to deadlines for Medient to create jobs or invest capital. But Henry said he expects those deadlines eventually will have to be moved because “there are a lot of things that are beyond our control that we’re going to have to wait for.”
Medient plans to build a $90 million movie production and entertainment complex on 1,600 acres of IDA land at Old River Road in Effingham County.
Medient Studios (OTCQB: MDNT) recently announced that San Francisco-based Merriman Capital Inc. was appointed as the company’s capital markets advisor and designated advisor for disclosure for the OTCQX market.
The OTCQX marketplace is considered the top tier of the three marketplaces for trading over-the-counter stocks provided and operated by the OTC Markets Group. To qualify for an OTCQX listing, a company must be current in its disclosure and be sponsored by a professional third-party advisor.