CATALIST-LISTED Spackman Entertainment Group on Tuesday entered into a non-binding memorandum of understanding (MOU) to sell its entire 43.9 per cent stake in entertainment talent agency Spackman Media Group to Spackman Equities Group for at least 27.9 million South Korean won (S$32.2 million).

If the divestment is completed, Spackman Entertainment and Spackman Equities plan to develop, produce and finance motion pictures and entertainment content for the North American market, as well as develop other entertainment-related businesses in North America, Spackman Entertainment said in a bourse filing.

These plans are in line with the group's strategy to diversify into the production and financing of Hollywood movies, it added.

The consideration for the divestment shall be no less than 2,000 won per share in Spackman Media, equivalent to the most recent significant transaction of the shares in public records.

The consideration will be fully satisfied by newly issued Spackman Equities shares, with the issue price of the shares to be discussed and agreed upon. Conditions precedent to the deal include the consolidation of Spackman Equities' common shares on a 10:1 basis.

The deal may constitute a reverse takeover, and could see Canada-listed Spackman Equities become a subsidiary of Spackman Entertainment, pursuant to relevant regulations of the TSX Venture Exchange.

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Spackman Equities is a substantial shareholder of Spackman Entertainment, while Spackman Media is an associate company of Spackman Entertainment.

Spackman Entertainment's non-executive director Richard Lee, and its executive director, president and chief operating officer Na Kyoungwon, are directors of Spackman Equities.

Negotiations are ongoing, and no binding agreement has been entered into, Spackman Entertainment said.

It added that it and Spackman Equities had agreed that the MOU, unless extended mutually, shall terminate if definitive agreement(s) are not executed by Sept 30.

Shares of Spackman Entertainment were trading at 0.8 Singapore cent as at 3.46pm on Tuesday, up 0.1 cent or 14.3 per cent.