The CEO of Medient Studios, Manu Kumaran, was ousted Thursday from the company he founded, capping off a dramatic day in which company insiders and shareholders took to Twitter to discuss the sudden turn of events.
Medient Studios said it had terminated Kumaran and appointed a senior member of the management team, Jake Shapiro, to take his place as CEO. Current board member Charles Koppelman was appointed chairman of the board of directors.
“The management had lost the focus of the vision of the company,” said Shapiro in an interview Thursday afternoon. “The focus is to make movies. ...The previous manager had lost that vision and was not making movies, which is what this company was created to do.”
Medient Studios Inc. has plans for a $90 million movie production and entertainment complex on a 1,500-acre site off Interstate 16 at Old River Road in Effingham County.
Shapiro said the new leadership team plans to restructure the company’s capital and reconfigure the studioplex design to cut costs. New board chairman Koppelman, an entertainment industry veteran, told investors during a conference call that the shake-up would renew the company’s focus on streamlined movie-making.
“I’ve always believed that content is king, and if you combine content with a world-class facility then you have a recipe for success,” said Koppelman.
Kumaran has not responded to messages since sending a statement to Georgia Public Broadcasting on Wednesday evening, but co-founder Pankaj Kapoor confirmed he had also been removed from the company.
“In my opinion, the ouster of Mr. Kumaran is illegal,” said Kapoor in an emailed statement. “Mr. Shapiro has taken over the company and fired the senior team who founded and developed the company. I was removed from the company as well.”
The leadership coup comes as the publicly traded company has suffered major financial setbacks in trying to raise capital for its proposed megastudio, among other projects.
The company’s stock, traded under ticker symbol MDNT, has plummeted to sub-penny level prices and was trading around .0019 Thursday afternoon. According to HotStocked, a website for penny stock traders, the company has lost more than 90 percent of its value over the year.
Al Silver, a Rincon resident and investor in Medient, said he has tracked the company’s progress closely and represents about five other local shareholders. He said share dilution seems to have been a key factor leading to the ouster of Kumaran.
A Securities and Exchange Commission filing dated June 10 by another shareholder accused the company management of trying to pay off debt through “massive issuances of common stock.”
“The notion that management has ‘no other options,’ other than massive share issuances, shows the desperate need for Medient to find candidates for its board of directors with experience in finding more appropriate, and legitimate, sources of capital,” wrote Timothy Stabosz in the SEC document.
Silver said he noticed the dilution around spring.
“It started a month and a half to two months ago and really ramped up in the last four weeks,” said Silver. “It stopped about 48 hours ago.”
Silver, who first invested in the company back in December when it was trading for .02 a share, said he made inquiries and found that the company currently has 1.934 billion shares of common stock. A month ago, according to Stabosz’s SEC filing, that number was closer to 661 million shares.
“I understand why they did it because they had to raise capital to build the studioplex,” said Silver. “But once the price per share drops to that sub-penny level, it’s evident you can’t raise the capital to build that studioplex.”
Shapiro addressed the issue during the call to investors.
“Let me be very clear, the days of endless dilution are over,” said Shapiro.
Medient has encountered other setbacks as Kumaran struggled to meet deadlines set by the Effingham County Industrial Development Authority, who owns the property where the studio is going and has a major hand in developing it.
Medient has a 20-year lease with an option to purchase for $100 at the end of the term.
Shapiro said they had secured “a number of permits” as well as an initial draft master plan, but alluded to major changes coming to the original futuristic design of the complex under Kumaran.
“There will be no supsension bridges made out of glass ... no LEED concert buildings built out of fairy dust,” said Shapiro. “We will build a stage at a time, a building at a time, a movie at a time, the way a sound management team builds businesses.”
The Effingham Development Authority began drilling a water well last month, a project estimated at $800,000. The state of Georgia is also giving Medient $3 million in tax incentives for the complex on the promise they will create 1,000 jobs.
Shapiro will receive 40 million shares of preferred stock as part of his promotion to CEO, a move that upset some shareholders who said they would’ve preferred to see him buy additional stock on the open market to boost investor confidence.
Timothy Shafer, a stock trader in Vero Beach, Fla., said he had invested about $15,000 in Medient Studios.
“Manu was a visionary and had some great ideas on how to run (Medient), but as a stock trader — as a company owner — sometimes a visionary isn’t the one that can make it happen,” said Shafer.
Shafter said he first invested in the company because he felt positively about the vision and potential revenues from films such as Medient’s latest release “Yellow” by director Nick Cassavetes. He believes new board chair Koppelman will be critical to providing stability.
“Right now there’s too much uncertainty, too much up in the air right now, and it needs to be brought back down,” said Shafer.
Silver described his time as a Medient shareholder a bit more succinctly.
“It’s been a roller-coaster ride,” he said.
ON THE WEB
For a full Q&A with the new Medient CEO Jake Shapiro, go to savannahnow.com.