Salsaga Blog

SAN FRANCISCO, July 10 /PRNewswire/ — Dear Premier Exhibitions Board of Directors:
Odyssey Value Advisors, LLC calls upon Premier Exhibitions’ Board of Directors to hire a nationally recognized investment banking firm to explore the sale of the company, or the Titanic assets, for the purpose of maximizing shareholder value.
While we realize that the first quarter results were skewed by the timing of certain events and partners, as well as broad economic weakness, the company has not been able to generate any shareholder value for a prolonged period of time. In our opinion, given the extended period of time that has passed, and the efforts of multiple management teams, now is the appropriate time to monetize the company’s assets to maximize shareholder value.
While we think highly of Mr. Eskowitz, we feel he has not made substantive enough progress to date, as evidenced by the series of decreasing earnings and cash flow generation since he has come aboard, culminating in Q1’s unacceptable EPS loss.
The company continues to pursue a risky mega-growth strategy which jeopardizes the strong margin of safety that exists with cash and assets. We feel that the current “empire building strategy” of attempting to become one of the largest sellers of entertainment tickets, at the expense of short to intermediate profitability is a flawed strategy that is clearly not working. It would take several years for this strategy to possibly prove to be successful. Clearly that is not worth the time, erosion of resources, and greatly diminished return on equity, even for the most patient of shareholders.
If the company pursued a more moderate growth strategy, which we think would be prudent given the state of the consumer and economy, Premier Exhibitions would be PRINTING money, enjoying their historically high return on equity and the stock would surely be trading in double digits.
The misguided strategy of scaling corporate SG&A by 300% year over year while delivering only 34% revenue growth in the same time period has led to the destruction of shareholder value. We implore the board of directors to explore the sale of the company or its Titanic assets, given their estimated value is clearly worth substantially more than the current company market cap.
As the stock price has declined by approximately 80% over the past year, management has been in the fortuitous position of receiving substantial (some may argue egregious) compensation, while shareholders have been decimated. Mr. Geller is currently receiving a salary of $675,000 for serving as chairman of a $100mm market cap company. While Mr. Geller created the company, and we applaud the fact that he owns millions of dollars worth of stock, there is no economic justification for his current compensation package, which is paid for by shareholders.
Mr. Couter, the former CFO, sold millions of dollars worth of stock, at prices that are five times higher than current prices, soon after providing financial guidance that was light years away from the economic realities.
Mr. Eskowitz received $2mm in a cash bonus for simply joining the company. Since he has come aboard, the stock has fallen 80%. Mr. Eskowitz has not felt the economic pain of shareholders, as he has never purchased stock with his own capital despite numerous promises.
However, the assets of the company are valuable. Clearly, the value of the artifacts of the Titanic, especially with the 100 year anniversary of the sinking of the ship less than four years away, is worth considerably more than the current market cap. By our estimation, the assets of the Titanic are most likely worth at least twice the market cap. Furthermore, the rights to the personal possessions of the survivors, which should be clarified soon, are worth multiples of that.
In addition to the assets of the Titanic, the company’s exhibits clearly have value. Premier operates the very successful Titanic shows (only a portion of the Titanic assets are even used for these shows), a very successful Bodies exhibition, and has two new promising exhibitions scheduled to come on line in the near future.
A strategic buyer/acquirer of the business could streamline bloated costs; eliminate incremental costs of being public, while deploying Premier’s valuable content on an existing distribution platform. Alternatively, or in addition to, a court approved sale of the Titanic assets to a collector would surely yield a sum much greater than the current market cap, especially with the optionality of the personal possessions.
Given the lack of debt, successful exhibitions and incredible value of the assets, it is clear that this enterprise is worth at least twice the current market cap. Since multiple management teams have been unable to unlock the company’s inherent value, we call for the immediate sale of the company or similar activities that would provide relief for long suffering shareholders.
While we can’t speak for any other shareholders other than ourselves, we suspect all shareholders will appreciate your acceptance of the current realities of the situation and your immediate actions to remedy them.
It is simply time for the shareholders to get paid, too.
I look forward to your response.

Sincerely,

William G. Vlahos
Managing Partner
Odyssey Value Advisors, LLC

Odyssey Value Advisors, LLC

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