Media production company mm2 Asia has announced a one-for-one rights issue to shareholders, as it seeks to repay its $50 million 7% fixed rate notes, due on April 27.
For each existing mm2 Asia share, shareholders are entitled to subscribe for a new mm2 Asia rights share at 4.7 cents, which is a hefty discount of 60.83% to the closing price of 12 cents apiece on Feb 1.
The company has an existing share base of 1.16 billion shares. If fully subscribed, the rights issue will raise some $54.65 million in gross proceeds. An EGM will be called for shareholders to give their go-ahead.
In support of the company and the proposed rights issue, controlling shareholder and executive chairman of the company Melvin Ang will subscribe to his entitlement in the rights issue, but not excess rights shares, says the press release.
Ang, who holds approximately 38.11% of the company’s shares, will nearly double his share count to 886.3 million shares.
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Citing the “unprecedented global disruption to the media and entertainment industry” as a result of Covid-19, mm2 Asia acknowledges that the industry’s outlook remains challenging. "The cinema business remains challenging, as safety restrictions and the delayed release of movies keep crowds from returning to theatres,” says the press release.
“Whilst mm2’s financial performance in this financial year is affected by the full-year impact from Covid-19, the company’s fundamentals remain robust and management is taking pro-active steps to strengthen the group's balance sheet,” says Wilhem Lee, senior executive director at UOB Kay Hian, which is the manager and underwriter for the rights issue.
“Going forward, the outlook for mm2 is very encouraging, as its market position remains strong amongst the top entertainment content producers in Asia,” adds Lee.
The company had earlier announced on Jan 21 that it had sought and secured an extension of the maturity date for the convertible debt securities of $47.85 million, issued on Feb 7, 2018, until the end of 2021.
Headquartered in Singapore, mm2 Asia is a producer of movies and TV and online content. As a producer, mm2 Asia provides services that cover the entire filmmaking process including securing financing, producing and distributing as well as securing advertising and sponsorship.
See: mm2 Asia mulls separate listing of its cinema business
Abroad, mm2 Asia also has a presence in Malaysia, Hong Kong, Taiwan and the PRC through the Group companies and/or strategic working partnerships. Over the years, mm2 Asia has produced or co-produced and/or distributed more than 20 movies. Among its notable productions include ‘Ah Boys to Men’, the highest grossing local production in Singapore in 2012.
Last December, mm2 Asia announced it is mulling a spin-off of its cinema business for its own listing on the Catalist board. United Overseas Bank and other professional advisers have been appointed for this proposed spin-off.
According to the company’s website, it runs 133 screens across 18 locations in Malaysia under the mmCineplexes brand. In Singapore, it runs 64 screens across 8 locations under the brand Cathay Cineplexes.
In FY2019, mm2’s cinema business generated revenue of some $100.7 million, out of the total of $266.2 million. In the preceding FY2018, the corresponding numbers were $45 million out of $192 million.
mm2 Asia last traded at 12 cents before it was halted.
