Large Investor in Multimedia Games Demands Increased Shareholder Value

Aug. 7.06 | About: Multimedia Games, (MGAM)

In an amended 13D filing on Multimedia Games Inc. (NASDAQ:MGAM) this morning, Liberation Investment Group disclosed an 8.52% stake (2.311 million shares) in the company. This is up from the 7.47% stake the firm disclosed in a past filing.

The group said the company has not demonstrated that it has made progress toward implementing any of its proposed changes or other strategies to maximize shareholder value. The group said unless the company promptly articulates a strategy to maximize shareholder value, they intend to solicit shareholders to call a special meeting of shareholders for the purpose of electing new directors to the Board.
From 'Purpose of Transaction' section of the filing:

The Reporting Persons have previously advised the Company that it should pursue one or more of several strategies to maximize shareholder value,including but not limited to the following: (i) retain an experienced investment bank immediately to evaluate all strategic alternatives, (ii) focus on a transaction or restructuring to monetize the Company's participation arrangements with Native American tribes in the State of Oklahoma and use the proceeds to implement a substantial stock buyout or otherwise create a mechanism to deliver maximum value to stockholders, and (iii) recapitalize the Company's balance sheet to enable a significant stock repurchase. The Reporting Persons have also advised the Company that it should expand the Board to include new independent directors who have strong industry backgrounds and are sensitive to shareholder concerns. Thus far, the Company has not demonstrated that it has made progress toward implementing any of these or other strategies to maximize shareholder value.

Unless the Company promptly articulates a strategy to maximize shareholder value, the Reporting Persons intend to solicit shareholders to call a special meeting of shareholders for the purpose of electing new directors to the Board.If a special meeting is called, the Reporting Persons intend to nominate individuals for election to the Board who will actively pursue strategies to maximize shareholder value consistent with, but not limited to, those described above. The Reporting Persons also intend to solicit proxies in support of the election of such directors at the special meeting.
The Reporting Persons reserve the right to pursue all available alternatives including, without limitation: communicating with other shareholders of the Company regarding the Company, its business, prospects and alternatives to maximize shareholder value; making one or more proposals for adoption by shareholders (including proposals to improve the Company's governance or to amend the Company's organizational documents); and proposing an extraordinary corporate transaction, such as a merger, reorganization,recapitalization or liquidation, involving the Company or any of its subsidiaries, or a sale or transfer of a material amount of assets of the Company or any of its subsidiaries, which transaction may involve the Reporting Persons or third parties unrelated to the Reporting Persons. The Reporting Persons may also purchase additional Common Stock in the open market, in privately negotiated transactions or otherwise; alone or in conjunction with others, seek to acquire, the Company or substantially all of its assets or outstanding securities, including by merger, tender offer or stock or asset purchase; or sell all or a portion of the Common Stock now owned or hereafter acquired by them. The Reporting Persons may also urge other persons, including,without limitation, other stockholders of the Company, to take or pursue any of the foregoing.

The Reporting Persons reserve the right to change their plans or intentions and to take any and all actions that they may deem appropriate to maximize the value of their investment in the Company in light of their general investment policies, market conditions, subsequent developments affecting the Company and the general business and future prospects of the Company.

Except as set forth above, the Reporting Persons do not have any current intention, plan or proposal with respect to: (a) the acquisition by any person of additional securities of the Company, or the disposition of securities of the Company; (b) an extraordinary corporate transaction, such as a merger,reorganization or liquidation, involving the Company or any of its subsidiaries;(c) a sale or transfer of a material amount of assets of the Company or any of its subsidiaries; (d) any change in the present board of directors or management of the Company, including any plans or proposals to change the number or term of directors or to fill any existing vacancies on the board; (e) any material change in the present capitalization or dividend policy of the Company; (f) any other material change in the Company's business or corporate structure; (g)changes in the Company's charter, bylaws or instruments corresponding thereto or other actions which may impede the acquisition of control of the Company by any person; (h) causing a class of securities of the Company to be delisted from a national securities exchange, if any, or cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association; (i) a class of equity securities of the Company becoming eligible for termination of a registration pursuant to Section 12(g)(4) of the Act; or(j) any action similar to any of those enumerated above.

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