Friday, July 21, 2006

Trinad Capital Still Wants To Buy 2M Shares of Majesco Entertainment (COOL) at $1.50, Requests Other Changes

In a 13D filing out late Thursday on Majesco Entertainment Co. (Nasdaq: COOL), Trinad Capital disclosed a 13.24% (2.96M share) stake in the company. The group disclosed two letters sent to the company's board:
From the 'Purpose of Transaction' section of the filing:
1. On June 27, 2006, the Master Fund sent a letter to the Issuer's Board in which it again made an offer to invest $3 million in the Issuer through the purchase from the Issuer of 2,000,000 shares of Common Stock at a price of $1.50 per share. This offer was rejected by the Issuer.

2. On July 19, 2006, the Master Fund sent another letter to the Issuer's Board in which it again renewed its offer to invest $3 million in the Issuer through the purchase from the Issuer of 2,000,000 shares of Common Stock at a price of $1.50 per share. The Master Fund believes that this capital is immediately required by the Issuer both to meet internal liquidity requirements and to ensure that the Issuer continues to meet the financial guidelines necessary to comply with Nasdaq's listing requirements, and further notes that:

* Jesse Sutton, the Issuer's President and the son of Morris Sutton, the Issuer's Chairman, sold approximately 157,500 shares of the Issuer's Common Stock earlier this month for aggregate proceeds of more than $235,000, including the sale of a substantial number of shares at a price of $1.35 per share - well below the price of the Master Fund's offer to invest in the Issuer. In the Master Fund's view, this clearly indicates a lack of confidence in the Issuer's prospects by one of the Issuer's principal executive officers.

* Last month, the Russell U.S. Indexes announced that the Issuer will be removed from the Russell 3000 membership list. As stated in the Russell website, "the Russell family of U.S. Indexes is designed to be a comprehensive representation of the investable U.S. equity market. The Russell 3000 Index measures the performance of the 3,000 largest U.S. companies based on total market capitalization, which represents approximately 98% of the investable U.S. equity market." We believe this detrimental development is the direct result of the Issuer's failure to maintain sufficient levels of stockholders' equity and also reflects the Issuer's formerly pending delisting from Nasdaq.

In the Letter, the Master Fund also requested that the Issuer take all actions necessary to nominate three (3) individuals proposed by the Master Fund to the Issuer's Board of Directors and take any further action so that the Issuer's Board consists of a total of seven (7) members. Additionally, theMaster Fund respectfully requested that Jesse Sutton immediately resign as an officer and employee of the Issuer or be terminated as such.

In the Letter, the Master Fund advised the Board of the Issuer to immediately begin to explore strategic alternatives, including financings, or a combination through merger or otherwise with another company that has an appropriate infrastructure, Board and management team that collectively will enable the Issuer to reach its potential. The Master Fund urged the Board of the Issuer to improve upon the disclosure it makes available to the public, including providing greater detail in its earnings releases and scheduling regular conference calls with investors so as to allow an exchange of questions and answers, in each case as is appropriate for a Nasdaq-listed company. A copy of the Letter is attached as Exhibit A hereto and is incorporated herein by reference.

The Reporting Persons have made numerous requests that the Issuer and the Board take actions to improve the performance and financial condition of the Issuer and to establish a more appropriate corporate governance structure. To date, the Issuer has not acted upon any of the Master Fund's requestsThe Reporting Persons may at any time, or from time to time, acquire additional shares of Common Stock or dispose of their shares of Common Stock, propose or pursue any of the foregoing actions or matters or change their intentions with respect to the matters referred to herein.


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