Artivision Technologies, which is listed on the SGX Catalist, has entered into a non-binding agreement to sell Artimedia, its media solutions subsidiary engaged in video digital advertising, in an all-cash deal worth S$50 million, according to an announcement on Thursday.
While not legally binding, there is an exclusivity period of three months for negotiations.
According to the company, the potential purchaser is incorporated in the Cayman Islands and is a private equity (PE) fund that maintains an international mid-market media focus. It is reported to have $50 billion in assets under management (AUM).
The PE fund was introduced to the company by STS Capital Partners International Inc. (STS Capital), a boutique M&A firm specialising in sell-side consulting and advisory services for mid-market entrepreneurial and family businesses.
According to Artivision, Artimedia has been loss-making since its incorporation in 2008 and requires substantial funding to expand its operations.
A statement in the filing explained: “Despite various attempts to raise funds in the past, the company has not been able to obtain adequate funding for the disposal gto grow and continue as a viable business going forward. Based on the indicative consideration, the proposed disposal is expected to yield a gain of about S$38.0 million.”
The proposed disposal will benefit Artivision in settling immediate funding needs, reducing liabilities, improve its gearing and securing capital that can be deployed for expansion into other businesses or for undertaking new investment opportunities that may emerge. It will also aid the company in raising the funds needed to redeem bonds and repay a convertible loan.
Artivision last traded on Wednesday at S$0.022, up S$0.004 or 22 per cent, prior to a trading halt being called. Shares have resumed trading today. As at 1626hrs, it was trading at S$0.026, up S$0.004, with a market capitalisation of about S$34.7 million ($24 million).