MAINBOARD-LISTED entertainment group mm2 Asia has proposed a renounceable underwritten rights issue of one rights share for every one existing share held, at 4.7 Singapore cents for each rights share, it said in an exchange filing on Wednesday.

The issue price of 4.7 Singapore cents per rights share represents a discount of around 60.8 per cent to the closing price of 12 Singapore cents per share on Monday, being the last trading day prior to the announcement. It is also a 43.7 per cent discount to the theoretical ex-rights price of 8.35 cents, based on the closing price on Monday.

Upon the completion of the rights issue, the company will receive net proceeds of around S$52.2 million; the funds will be used to pay off the medium-term note due on April 27, and for general working capital and operations of the group.

mm2 Asia said although the media industry has been hit hard by the pandemic globally, it remains "well-positioned" for recovery post Covid-19. However, it noted that the group's operating cash flows and financial position have been "adversely affected by the Covid-19 disruption".

"The company is thus undertaking the rights issue as a prudent measure to strengthen the financial position and capital base of the group," mm2 Asia said in the exchange filing. "The rights issue will also provide the shareholders with an opportunity to further participate in the equity of the company."

mm2 Asia said that it received in-principle approval from the Singapore Exchange on Tuesday for the proposed rights issue, and that its board of directors have passed a resolution to call for an extraordinary general meeting to approve the proposed rights issue.

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign UpVIEW ALL

Melvin Ang - founder, executive chairman and largest shareholder of mm2 Asia - has around 38.1 per cent of the share capital in the group. He has stated his intention to vote in favour of the resolutions to approve the rights issue and to subscribe for his pro-rata entitlement to the rights shares.

The renounceable rights issue is fully underwritten by UOB Kay Hian, which is also the lead manager.

Shares of mm2 Asia closed at 12 Singapore cents on Monday, before a trading halt was called on Tuesday morning.