mm2 Asia, on July 14, announced that its board has “no concerns” on the group’s ability to operate as a going concern basis.
This comes after the group’s auditor included a separate section under the heading of “material uncertainty related to going concern” in its auditor’s report on mm2 Asia’s audited financial statements for the FY2022 ended March 31.
“In forming the audit opinion, the independent auditor has considered both the adequacy of the disclosure made in the financial statements and management’s use of the going concern basis of accounting in [the] preparation of the financial statements, which remain appropriate,” reads the statement released by mm2 Asia on July 14.
The group’s financial statements have been prepared on a “going concern basis” with the assumption that the group will be able to meet its liabilities as and when they fall due.
In its audited financial statements, mm2 Asia reported a net loss of $42.0 million for the FY2022, narrowing from the $99.5 million loss in FY2021.
As of that date, its current liabilities exceeded its current assets by $76.3 million. Its current liabilities include borrowings amounting to $154.4 million as at March 31.
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However, the group points out that it had taken several steps to “address the going concern”, including raising $19.5 million in new share placements.
The group’s subsidiary, mm Connect, had also entered into agreements to issue unsecured convertible bonds in an aggregate of $12.0 million in May and June this year.
On June 15, the group entered into a term sheet with UOB Kay Hian as arranger in relation to a proposed issue of exchangeable bonds coupled with detachable warrants by the group. The principal amount of the exchangeable bonds is $54.0 million. The proposed issuance remains subject to entry into the definitive agreements after negotiations between the parties.
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According to the group, it has been “engaging continually with various lenders since the last financial year ended March 31, 2021 to obtain letters of waiver on certain compliances in facility agreements, refinancing of its existing loans and/or to extend existing loans tenure.”
The negotiations on the corporate exercise with the lenders are still ongoing.
“We would like to take this opportunity to thank our shareholders for their continued support. The group has been working on a strategy of recovery following the Covid-19 pandemic. We are glad that recovery is well on its way,” says Melvin Ang, executive chairman, mm2 Asia.
“We have made significant progress to strengthen our financial position, including right-sizing our businesses and innovating our offerings, to deliver value to our customers and shareholders. In the past one year, we have raised more funds than we have in the three years before the pandemic. For this we are very grateful to our backers who believe in our vision and are helping us to achieve our goal to be the leading media and entertainment company in Asia,” he adds.
Shares in mm2 Asia closed at 5.3 cents on July 13.
