November 29, 1999
Shareholders Want Change at RMS
Titanic
By BLOOMBERG NEWS
ASHINGTON -- An investment group that includes officials
from SFX Entertainment plans to oust the management of
RMS Titanic as part of an effort to get higher returns from the famous
shipwreck's artifacts.
By pooling their stakes, eight shareholders have obtained a 51 percent
stake in RMS Titanic, according to a Schedule 13D filed with the
Securities and Exchange Commission. The group has notified RMS
Titanic that they are using the majority control to remove George Tulloch,
the company's president; Allan Carlin, its general counsel; and two other
directors.
RMS Titanic, based in New York, holds the salvage rights to the Titanic,
which lies more than two miles underwater in the North Atlantic. The
shareholder group said it thinks that the ship's remains, including articles
recovered and those still on the ocean floor, are worth far more than
RMS Titanic's current market value of $51 million.
"We all know there are billions of dollars down there under the water,"
said Joe Marsh of Akron, Ohio, one of the shareholders who is listed as
affiliated with SFX Entertainment. "It's like sitting on a gold mine."
Shares of RMS Titanic rose 12.5 cents, to $3.15625, on Friday.
In addition to Marsh, the shareholder group includes Arnie Geller, a
founding president of RMS Titanic who owns 1.45 million common
shares and controls the voting rights for 1.05 million more shares. David
Lucas and Steven Sybesma, both executives of Sunshine Concerts, an
affiliate of SFX Entertainment, also belong to the investment group.
Because RMS Titanic is incorporated in Florida, shareholders could
replace board members at any time through what is known as a written
consent solicitation, Geller said. This process required the dissident
shareholders to get written consents from investors holding a majority of
RMS Titanic shares.
Geller said the investment group had provided notice of the board change
to RMS Titanic but had yet to speak personally with Tulloch. Officials at
RMS Titanic could not be reached for comment.
SFX Entertainment, run by Robert Sillerman, ranks as one of the
country's largest producers of live music, theater and sporting events. It
also has a contract to present exhibitions of artifacts from the Titanic.
Under this contract, SFX, based in New York, pays RMS Titanic $8.5
million a year as well as 65 percent of the profits from exhibitions,
according to Marsh. Titanic exhibitions are being held in cities like
Toronto and Las Vegas, Marsh said.
It was not clear whether SFX Entertainment would have a larger role at
RMS Titanic under Geller, who plans to take over as president,
according to the S.E.C. filing. Geller said in an interview, however, that
one of the shareholder group's main goals was to expand the number of
exhibits that can be held at one time, a strategy that will require RMS
Titanic to salvage more artifacts.
"Our plan right now is to expand on the very successful exhibition base
that we have right now," Geller said. "We would like to step up the
pace."
One question is whether the shareholder group would sell some of the
items salvaged from the Titanic, a step that could raise millions of dollars
and help establish a higher value for RMS Titanic shares. While survivors
of the 1912 shipwreck have previously sold some Titanic memorabilia,
RMS Titanic has never sold anything brought up from the ocean floor.
Geller said he wanted to concentrate on expanding the exhibitions held
by RMS Titanic. Marsh, on the other hand, said the shareholder group
would consider a range of ways to increase shareholder value.
"If we can pull up $1 billion worth of stuff, we are going to figure out how
to get $1 billion out of it," Marsh said. |
