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Spackman says it priced in growth premium for SMG stake purchase

SPACKMAN Entertainment Group said Thursday it is eyeing significant growth prospects with expansion of its equity stake in associate company, Spackman Media Group (SMG).

Responding to queries from the Singapore Exchange, it cited valuation reports and valuation of SMG’s shares in transaction with a third party as justification to acquiring SMG shares at a significant premium to the latter’s net tangible asset (NTA) and net asset value (NAV).

Spackman on Aug 6 said it had entered into share sale and purchase agreements calling for the issuance of new ordinary shares with a total value of US$4.0 million to purchase over 1.34 million SMG shares, or 4.23 per cent equity interest in SMG, at an average price of US$3 per share. SMG’s NTA and NAV was US$7.9 million and US$12.7 million respectively, based on its audited financial statements for the full year ended Dec 31, 2017.

Spackman on Thursday said RHB in a report dated April 6 2017 estimated that SMG’s value per share would be between US$4.70 to US$8. Prior to this, Spackman completed on March 31 2017, the acquisition of Frame Pictures Co with the latter accepting 497,250 SMG shares at US$6.80 apiece as part settlement of the consideration.

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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 LLP, 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 closed at 5.4 Singapore cents on Tuesday.