Arena Group Holdings Inc., the media company that runs Sports Illustrated and TheStreet, said Friday that interim Chief Executive Manoj Bhargava had resigned to steer clear of potential conflicts, and that it had missed some payments and tapped a consulting firm to help shore up its finances.
shares plummeted 27.9% after hours on Friday, after finishing 17% lower at the trading session’s close. The stock has tumbled 74.4% over the past 12 months.
The moves come as the company tries to turn itself around amid difficulties managing the famed yet beleaguered sports publication. In a regulatory filing on Friday, Arena said it had engaged the business-advisory firm FTI Consulting to help with the turnaround and “forge an expedited path to sustainable positive cash flow and earnings to create shareholder value.” As part of that those efforts, Jason Frankl, a senior managing director at FTI, was appointed chief business transformation officer at Arena.
The company said that Bhargava was stepping down as CEO to avoid conflicts of interest that could emerge as part of pending or potential deals.
Arena said in the regulatory filing that it had failed to make a roughly $2.8 million interest payment related to a note-purchase agreement held by Renew Group Private Limited. The outstanding principal on the notes was around $110.7 million at the end of last year, and created an “event of default.” Arena said it was in discussions with Renew to restructure the debt.
Arena also said it failed to make a quarterly payment of roughly $3.75 million due to Authentic Brands Group, the company from which it licenses the rights to Sports Illustrated’s editorial operations.
Sports Illustrated has dealt with multiple rounds of layoffs, along with struggles to drive engagement and questions about Arena’s oversight of the publication.
In November, a report from the tech-news website Futurism alleged that Sports Illustrated had created and published AI-generated content under the guise of fake writers. Shares were hit hard afterward. A New York Times report that same month said that employees had accused Arena of being “dismissive of concerns about article quality and a lack of editors.”
Arena last month fired its previous CEO, Ross Levinsohn, and has also dismissed other executives.
Earlier this week, the New York Post reported that James Heckman, the former publisher of Sports Illustrated and former CEO of the company that became Arena, had hatched a plan to take over the sports publication. That effort, the Post said, had the support of cryptocurrency entrepreneur Brock Pierce.