Disgruntled ScanBox shareholder, Kevin Cox, is concerned that a new director is ignoring the concerns of minority shareholders in the company as he makes some changes to the company.

Robert Conway of the legal firm Conway, Leather and Shaw in Sydney was appointed as a director of Scanbox last year.

He was put onto the board by the administrator of the major shareholder.

Since being on the board he has swanned around the world at company expense and as a non executive director started to act like an executive director starting to do deals etc. much to chagrin of the chairman of the board and the MD of the company.

However, as the representative of the major shareholder it was always going to be difficult to pull him into line.

On Thursday this week, Conway – acting on behalf of the major shareholder – dismissed Michael Rhodes as chairman and director of the Company.

No indication was given that this was going to occur when the AGM was held less than a week before.

One would have thought that the major shareholder should have indicated that this was going to happen. No reasons have been given for Rhodes dismissal. As Rhodes is clearly someone who has the best interests of the Company at heart and has rescued it from an impossible position, it is difficult to see the reason for his removal being beneficial to the Company.

The reasons would appear to be something more with the interests of Conway himself rather than in the interests of all shareholders. It appears that ‘legally’ all this is OK.

If it is, then the rules stink.

It seems Conway introduced Stabler to Scanbox and through his personal contacts with him made him aware of the Scanbox ‘opportunity’. Stabler is an interesting person and besides being responsible for “8 heads in a duffel bag” was involved in a group called “Dimension Films”.

Stabler nor Conway did not mention at the shareholders’ meeting some other events in Stabler’s past. Some extracts of published reports mentioning Stabler are given at the end of this report.

It appears that Stabler was the driving force behind a film company “Destination Films” that appear to have lost English investors $100M dollars through some interesting financing arrangements and also some interesting company expenses.

However, it also appears that Stabler came out of Destination quite well and has picked up the remains of the company and the company personnel.

The problem for Scanbox minority shareholders is that we now have Conway running the show and being in a position to accept whichever offer he pleases from whichever party he wishes for the majority shareholder shares. There would at best appear to be a conflict of interest in this situation.

It is a good bet that no matter what other bidders will do, then Conway will select his mate Stabler’s offer.

The sad thing for minority shareholders is that we can do nothing about any of this. We have no board representation since the removal of Rhodes.

A possibility is that if Stabler gets the majority shareholding then he will sell the films in the company that have no value on the books to himself.

All seemingly legal and the existing shareholders will be able to do nothing except try to sue him in the future and that is going to be hard with him in the USA and the amount involved not a substantial amount.

Everyone knows what is likely to happen but it seems that nothing can be done until the moves are made.

How much better to have a system where people who may be prepared to look after the interests of minority shareholders cannot be dismissed from boards by major shareholders?

From filmjerk.com

“David Robb, the former Hollywood Reporter journalist who quit his job last week in a dispute with the publisher over an investigative article he had written about the trade paper’s gossip columnist, has found an outlet for his work: the online media magazine Inside.

Robb includes allegations in his article that Reporter columnist George Christy accepted numerous favors from persons and companies that he wrote about — particularly Steve Stabler and Brad Krevoy of Motion Picture Corporation of America and Destination Films.

He claims that for years Christy received free office space from the now-defunct companies valued at $1,000-$1,250 per month and that although his credits appear in listings for five films produced by Stabler and Krevoy, Christy is nowhere to be seen in any of them. (A reader sent this note to Studio Briefing Tuesday: “When Stabler left to form Destination Films, Christy came with him and had a nice new office right down the hall from Stabler, Neil Sacker, Jon Bertolli and Barry London. I walked by it all the time. They even bragged about how he was their ‘boy.’ Why else do you think a bomb-ridden operation like MPCA or Destination Films received so many mentions in ‘The Great Life’?”

From the Hollywood reporter

STABLER GOES SOLO

Wasting no time since stepping down as Chairman of Destination Films, Steven Stabler has hired Fernanda Niven, Alessandro Uzielli and Michael Nadeau from Destination to develop and produce features. Based in Destination’s Santa Monica offices, Stabler has yet to settle on a name for his production company, which has a four-year, first-look deal with Destination.

02/19 – Final Destination!

Prod company lays off staff as fund raising falls flat By DANA HARRIS

Destination Films closed its doors for good and pink-slipped all employees at the end of business Friday when the company was no longer able to meet payroll to continue operations. It has yet to be determined how the company’s three remaining titles will be handled: “Slackers” starring Devon Sawa, “Buying The Cow” starring Jerry O’Connell and “Ring Of Fire” starring Kiefer Sutherland. All three were originally slated for the last quarter of 2000, but were pushed forward when the company no longer had the funds to cover their release. Over the last year, Destination CEO Barry London has been spearheading an effort to assemble an equity base for the company. The company recently came close to achieving that goal with venture capital, investment from Microsoft and a commitment from Sony to continue Destination’s video output deal through Columbia TriStar Home Video. This would have subordinated its insurance debt and provided a more-appealing profile to banks that could provide a P&A fund. In the end, however, the company simply ran out of both money and time.

The production and distribution company was launched by Steve Stabler and Brent Baum in October 1997 with a $100 million bond issue backed by a syndicate of insurers. However, that business plan included no equity investment – a detail that became Destination’s Achilles heel when the shingle’s cash reserves began to run dangerously low. Indeed, Destination’s business plan proved to be a cash-burning machine. Steep fees attached to the company’s financing reduced usable funds to $70 million, which now had to cover overhead for some 85 employees as well as production and distribution costs for a company that planned to release 12-15 titles a year.

And while Stabler and Baum had intended to launch the company with an additional $100 million in the form of a revolving credit line, banks shied away from the equity-free company. Although a number of players kicked Destination’s tires, including Rockefeller heir Nick Rockefeller, none would commit.

Destination’s name had been muddied by its insurance-backed financing – a move initially heralded as revolutionary but more recently associated with fiscal disaster. There were other disappointments as well. Destination greenlit and cast “The Wedding Planner,” only to be forced to sell the project to Sony when Destination did not have the necessary production funds. And while Destination did not have a library that would have helped maintain a consistent cash flow, the releases have been strong video performers.