mm2 Asia proposes share placement, rights issue with private equity fund
Proposed transactions part of company’s overall restructuring, as it aims to strengthen capital base, improve working capital position
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[SINGAPORE] Entertainment group mm2 Asia is looking to work with a private equity fund to raise funds for its restructuring and working capital needs, the mainboard-listed group said on Monday (Mar 9).
The company aims to raise funds via a share placement and a rights issue, pursuant to a term sheet agreement it entered into on Mar 4 with a wholly owned subsidiary of Hildrics Asia Growth Fund VCC, a private equity fund that provides growth capital to mid-tier South-east Asian enterprises.
Hildrics Asia in September entered into a placement deal to raise its stake in mm2 Asia’s subsidiary Vividthree from 7.98 per cent to 29 per cent.
The term sheet will terminate on the 60th day from the date of signing, unless mutually extended by the parties in writing. The entertainment group said that it will not pursue equity funding transactions with other parties without Hildrics Asia’s consent for a period of 60 days from the signing of the term sheet.
The proposed transactions are part of mm2 Asia’s overall restructuring, as the company aims to strengthen its capital base and improve its working capital position.
“The board believes that the proposed transactions are in the best interests of the company and its shareholders as they will improve the company’s financial position,” stated mm2 Asia.
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Under the proposed placement, Hildrics Asia will invest and subscribe for new ordinary shares with an aggregate consideration of S$15 million. The proceeds from this are intended to fund mm2 Asia’s restructuring and working capital.
The proposed rights issue is intended to raise up to S$10 million, which will be fully underwritten by Hildrics Asia. Proceeds from the rights issue, after deducting expenses, will be used to finance mm2 Asia’s working capital needs.
The proposed transactions are subject to the fulfilment of various conditions, mm2 Asia said. These conditions include approvals from creditors, requisite judicial and regulatory approvals – including the grant of a whitewash waiver by the Securities Industry Council – and, if required, the approval of shareholders.
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Payment demands
This comes as the company continued to receive payment demands from creditors after it sought a High Court moratorium on Nov 10, to prohibit winding-up resolutions from being passed for a four-month period.
The board said then that mm2 Asia is unable to demonstrate that it can continue as a going concern.
Subsequently, its unit mm2 Entertainment received a S$6.3 million payment demand on Dec 28. This concerned alleged arrears linked to investment agreements for movie productions and a refundable deposit for a television series.
The unit on Jan 5 received a payment demand for S$200,000, relating to the alleged non-payment of the amount, alongside interest and legal costs.
Shares of mm2 Asia have been suspended since Nov 11; they last closed at S$0.003.
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