New media advertising agency BMCMedia is seeking to raise around $13 million to fund the continued development of its Asia Pacific business, announcing it will be undertaking a renounceable Rights Issue.
The Rights Issue entitles all shareholders with registered Australian or New Zealand addresses to subscribe for one new share for every three they currently own. The $0.30 per share price BMCMedia will offer for the Rights Issue is around a 22 per cent discount on the closing price of the companys shares for the 30 trading days to January 22. 2001.
In real terms, the Rights Issue will result in 44 million new shares being issued, which will raise around $12.2 million after underwriting fees and expenses. This will increase the companys total number of shares from 131 million.
These funds will be used for general working capital purposes, according to a BMCMEdia statement, as the company develops its Asia Pacific growth strategy and new opportunities in the region. Such opportunities aim to build on the companys involvement in advertising rights for the 2001 China Games and an online ad deal with Qantas for a sub-site, recent deals that have so far not had positive long term effects on BMCMedias share price.
The announcement of the Rights Issue comes amid BMCMedias suspension of trading, which has frozen the companys share price at 39.5 cents. The company is expected to make another announcement on Wednesday. BMC also plans to release its fourth quarter cash report on or by January 31, in which it expects to show around $4.5 million in cash, a $10 million undrawn line of credit and cash burn rates of around $1.1 million per month.
The Rights Issue is fully underwritten by Johnson Taylor Potter Corporate Finance (JTP), which was assisted by HSBC New York in assembling sub-underwriters.
According to BMCMEdia chairman Nick Greiner, the company decided to undertake the Rights Issue after consulting with advisors, to ensure that appropriate fudns can be raised, with existing shareholders having equal opportunity to participate or otherwise trade their rights.
BMCMedias largest shareholders, company founders Anthony Bertini and Shane Murray, will not take their entitlements under the Issue, but their rights will be acquired by the underwriter or other investors procured by the underwriter for a nominal amount. Major institutions have confirmed their commitment to BMCMedias business model by wanting firm allocations for the stock made available from the founders entitlements, said JTPs Bruce Wookey.
BMC plans to close the Rights Issue on February 27, with new shares allotted by March 20.