Premier Exhibitions Misses the Point

By Hewitt Heiserman

Last week I read Premier Exhibitions' (PRXI) reply to the Sellers Capital Solicitation. What a waste of 18 pages of paper! Geller's response is as limp as the spaghetti noodles I had for dinner.

In sum, Geller and his attorney take pains to refute on a micro level several aspects of the Sellers solicitation. Fine. Maybe Mark and his team didn't dot all their i's and cross all their t's.

But given the precariousness of Premier Exhibitions' situation, I also expected to read Geller's comprehensive 12-point plan for turning the business around. He has been back at the company since late-summer, so he must have some sense of where he wants to take the business.

I looked, to no avail. Instead, Geller resorts to bromides like, "I did it before [built the company], and I'll do it again."

The response does reference the involvement of a management consulting firm that the company has retained, but no additional details are provided. We are not told whether the consulting firm has worked with similar clients, nor its track record.

Big picture? Geller's refusal to welcome the four Sellers nominees to join the board speaks volumes. Each has impressive credentials, from what I can tell. Geller's narrow-mindedness heightens the company's risk of bankruptcy, in my view.

One funny item is that Geller attempts to undermine Mark Sellers' credibility by citing Mark's poor investment performance in 2008. Ignoring the obvious circular reference here (i.e., part of the reason the fund is down is because Premier is down), Geller is also selective in his facts. If Geller wants use Mark's 2008 results, then Geller should mention the long-term record, which is impressive. Since inception on Aug. 1, 2003, the Sellers fund has returned 19.3% (net) annually, vs. 0.2% for the S&P 500. In 2008, the fund declined 23.4%, vs. a 37% drop for the S&P 500.

Sign your Solicitation Consent and mail it in today. Premier Exhibitions needs new management.

Disclosure: At time of publication, Hewitt Heiserman and Complete Value Investor held long positions in Premier Exhibitions. These positions may change at any time.

Comments

[OffRoad:]

You've obviously been eating at the wrong Italian restaurant, Hewitt. Arnie - the very same executive that Sellers asked to come back to the table and save the meal, not to mention the company's largest shareholder and founder of the company - is quite simply cleaning up the mess that was cooked up and left behind by prior management. If you're really in it for the long term, let's get back to the basics that let Premiere be a premiere entertainment company (that is, in fact, the game plan - no silver bullet required), and THEN we can address where to go from there.

Jan 12 03:52 PM

[Yamsi:]

It's debatable whether Arnie Geller is the founder of the company. The predecessor of the company, Titanic Ventures, (later to become RMS Titanic, Inc.), was founded by George Tulloch. Although the stock went higher when Geller returned as CEO, the team led by George (at a much more reasonable salary) was the one that succeeded in securing the rights to the wreck and artifacts of Titanic -- probably the most valuable assets the company has now.


On Jan 12 03:52 PM OffRoad wrote:

> You've obviously been eating at the wrong Italian restaurant, Hewitt.
> Arnie - the very same executive that Sellers asked to come back
> to the table and save the meal, not to mention the company's largest
> shareholder and founder of the company - is quite simply cleaning
> up the mess that was cooked up and left behind by prior management.
> If you're really in it for the long term, let's get back to the basics
> that let Premiere be a premiere entertainment company (that is, in
> fact, the game plan - no silver bullet required), and THEN we can
> address where to go from there.

Jan 13 04:24 PM

[wiseman:]

Yeah, Sellers is doing a bang up job. Since coming on, they have made 0 productive changes:

1) They've fired the only two people who knew anything - Tom Zaller and Arnie Geller - and then hired an interim CEO that costs more than both of their salaries combined - they have made no other personnel changes, even though they promised to "trim the fat". Neither Arnie nor Tom have non-compete agreements, and since they actually know what they are doing, Premier just created a new, very motivated, competitor for themselves, and one with no overhead.

2) They brag about Mark Sellers "working for free", but neglect to tell the shareholders that the company is paying other Sellers Capital employees (like Sam Weiser, who is another Citigroup criminal) ridiculous consulting fees. Curious when the shareholders will get wind of this. Oh, not to mention the $100k/year salary for ALL board members now (except for Sellers, big deal) - before the board members received no salary. Yeah, the company can really afford that.

3) They hired a CEO who has no vertical knowledge. Of course, none of the new board members they brought on have specific vertical knowledge either (they mistakenly think that rock and roll shows and touring temporary exhibitions have anything to do with touring long-run exhibitions, they don't)

4) Sellers admitted they have no experience in taking over companies - and it shows. Sellers and Hughsam are hedge fund babies, nothing more, they made a lot of money over a few years (10 years experience in finance is basically no experience). Sellers talks about how his idol is Warren Buffet, but he follows none of his principles (yeah, very original, an investor who wants to be like Warren Buffet, how unique)

5) Sellers Capital was very reckless in the proxy fight and the method in which they got rid of Arnie Geller, which will most likely result in a costly lawsuit that will put further financial burden on the company.

6) It is clear that Sellers intention is to bankrupt the company in order to force a reorganization, stiff the shareholders, and salvage any money they can for themselves as directors of the re-org. Hopefully the shareholders will sue their asses off.

7) So now, instead of actually trying to fix things, they are spending all their time just getting up to speed on where Premier was (because they fired the people who knew how things worked, and didn't even try to negotiate with them), and dealing with legal matters. They scared the shareholders saying Premier was going to run out of money, but now they are burning through cash at double the rate they were before, and have made no net personnel changes.

Otherwise, brilliant job.

wiseman

Feb 28 09:21 PM