mm2 Asia is tapping shareholders again for funds with, a plan to raise up to $34.9 million in net proceeds with a rights issue, which is supported by both its second and third largest shareholders.
Under terms of a rights issue announced on Sept 29, mm2 Asia 1B0 , whose business of producing content and organising concerts was hit during the pandemic, is offering existing shareholders the chance to subscribe for 1 new share for every 2 shares they now hold, at 2 cents each.
At this price, it represents a significant 50% discount off mm2's last traded price of 4 cents. The company's share price is down 20% year to date and changed hands at its peak of 48 cents back in Jan 2017.
“We are making strong headway towards a full post-Covid recovery and are now looking ahead at future growth for our respective business segments," says executive chairman Melving Ang.
"We are building from a position of resilience, strength and expertise in the media and entertainment industry in Asia, and the proceeds will go towards our ongoing efforts to deleverage our group’s financial position, as well as fund our growth strategy and allow us to take advantage of the emerging trends," says Ang.
The company wants to allocate around half of the proceeds raised to pare debt, and another half for general working capital needs.
See also: Keppel DC REIT's upsized private placement 3.4 times covered
mm2, which operates cinemas as well, has a current base of 2.79 billion shares. Assuming all entitled shareholders take up their rights shares, the share base will increase by 1.78 billion to 5.3 billion shares.
In conjunction with the rights issue, tycoons Oei Hong Leong and Sam Goi Seng Hui, holding respective stakes of 8.45% and 6.41% respectively, have committed to take up their entitlement.
In addition, they will subscribe to excess rights shares - subject to a cap of 591.2 million - not taken up by otherwise entitled shareholders.
See also: Bromat Holdings to take $600,000 loan at 15% interest on top of rights issue
Under such a scenario where no other shareholders can be interested to take up the rights shares as well, Oei and Goi's respective shareholdings will increase to 22.57% and 20.93% respectively.
In a separate announcement, mm2 Asia says that subsidiary mmLive is raising $18 million from investors including Hildrics Capital in the form of convertible debt securities.
The debt securities carry a coupon of 6% per year and has a maturity of three years.
On May 20, the company reported revenue of $134.3 million for FY2023 ended March, up 60.8% y-o-y, with higher revenue from both its production and concert businesses.
However, its loss widened to $122.5 million from $42.1 million, with a big chunk of $117.7 million in impairment booked for its cinema business.
