SMG's prospects worth a premium, says Spackman

Singapore

LISTED Spackman Entertainment Group took into account significant growth prospects of Spackman Media Group (SMG) in deciding to pay more than book value to raise its equity stake in the Korean entertainment talent agency .

Responding to queries from the Singapore Exchange on Thursday, it cited valuation reports and valuation of SMG's shares to justify acquiring SMG shares at a significant premium to the net tangible asset (NTA) and net asset value (NAV).

Spackman said RHB in a report dated April 6, 2017 estimated SMG's value per share to be between US$4.70 to US$8. Separately, Spackman completed on March 31, 2017 the acquisition of Frame Pictures Co, in which the seller accepted 497,250 SMG shares at US$6.80 apiece as part settlement of the consideration.

Spackman on Aug 6 said it had entered into share sale and purchase agreements calling for the issuance of new shares with a total value of US$4 million to purchase over 1.34 million SMG shares, or 4.23 per cent equity interest. SMG's NTA and NAV was US$7.9 million and US$12.7 million, respectively, based on its audited financial statements for the year ended Dec 31, 2017.

Spackman reiterated on Thursday that it plans to capitalise on SMG's platform to participate in top quality entertainment content projects. SMG's "unparalleled portfolio of artists" provides the group access to "investment and collaboration opportunities in the highest quality projects that would otherwise be impossible to gain entry".

Spackman also said that it will continue to look at opportunities to expand its equity stake in SMG.

Spackman' interim CEO and executive director Richard Lee and chief financial officer and executive director Na Kyoungwon sit on the board of SMG.

The entertainment group said that it is in discussion with its external auditors, Baker Tilly, to assess the need of consolidating SMG financial statements. Citing a relevant financial reporting standard, the group said it is of the view that SMG is still considered an associate, not a subsidiary.

Spackman shares closed at 5.2 Singapore cents on Wednesday, down 0.2 Singapore cent.