Matomy Media Group's share price is up 8% in trading on the Tel Aviv Stock Exchange (TASE), while its bonds are surging 16%, reflecting a 19% yield to maturity. The company reported late last week that it had signed a binding agreement to sell shares in its Team Internet subsidiary. Matomy's market cap is still a negligible NIS 12 million; the company's share has lost 98% of its value since it was first listed for trading in February 2016.
Matomy holds 90% of the shares in Team Internet, which is actually its sole activity. The sale, which was postponed and previously encountered difficulties, is now going through at a total price of €45.9 million, most of it in cash. Matomy will not receive the entire amount: Rainmaker, which founded Team Internet and sold 90% to Matomy over the years, will receive €19.1 million from the sale of the company, whose value has increased.
Matomy was due to pay Rainmaker a year ago for the last 10% of Team Internet that it received. Fearing that it would be unable to service its bond debt, however, it began negotiations with Rainmaker and a debt settlement was signed a few months later. In effect, Matomy will buy this 10% according to the original terms, and Rainmaker will receive 40% of the price for the 10% stake. This is nevertheless good news for Matomy, because the company will now be able to repay its entire debt to the bondholders. This debt amounted to $28.3 million at the end of the second quarter, while Matomy had $11.9 million cash.
The deal is subject to approval by Matomy's shareholders. The company has scheduled a shareholders' meeting for December 23 to vote on the deal. In a letter sent to the shareholders by chairman Sami Totah (a general partner at the Viola Growth fund), he recommends voting in favor, writing that the deal is in the shareholders' interests, and that if it is not approved, the Matomy board of directors believes that it will materially affect the company's ability to solve its financial challenges.
Totah wrote to the shareholders, "After the deal is completed, the company will evaluate its options for being listed for trading in Tel Aviv and London." Matomy's share price has fallen 99% since its IPO in London in 2014.
Matomy's acting chairman and CEO is Sami Totah from the Viola fund, which holds a 9.8% stake in the company. Other prominent shareholders are international advertising group Publicis (23.9%), advertising tycoon Ilan Shiloah (10.5%), and Brosh Capital Partners (7%).
Published by Globes, Israel business news - en.globes.co.il - on November 17, 2019
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