Matomy plunges despite bid for subsidiary

Sami Totah

The digital advertising company yesterday reported a non-binding offer and said that it would enable it to repay its bondholders.

Israeli digital advertising company Matomy Media Group (LSE:MTMY; TASE: MTMY) has reported a non-binding offer for its Team Internet subsidiary. The company did not report the amount of the offer, but said that together with the cash it has, a sale at this price would enable it to repay its debt to its bondholders. The company's share price was down 28% on the TASE today. 

Matomy had $11.9 million in cash at the end of the second quarter, while its debt to holders of its bonds, listed on the Tel Aviv Stock Exchange (TASE), totals $28.3 million. The bonds are trading at a junk bond yield of 32%. As part of the agreement for the sale of Team Internet, Matomy will have to pay $20 million to Team Internet's founders for the 10% stake they still hold in the company (Matomy holds 90% of Team Internet's shares). As far as is known, the potential buyer is a European company.

Team Internet, which monetizes Internet domains, is currently Matomy's only activity. Matomy was to have acquired the remaining 10% held by Team Internet's founders, but delayed the payment because of concern that it would be unable to repay its bondholders and signed a debt arrangement with them.

A few months later, Team Internet's founders offered to buy the company back from Matomy at a lower valuation than that at which Matomy acquired it from them. This would have enabled Matomy to repay its debt to its bondholders in full without a debt arrangement. Due diligence, however, revealed issues that ultimately led to the deal being called off.

Matomy's share price, which rose moderately yesterday after the new offer was reported, is down today on both the TASE and the London Stock Exchange, losing 24% of its value on the TASE by mid-day. Matomy's share doubled in value in late August, after the company reported interest in Team Internet among potential buyers, but has since lost 30% of its value. Since its IPO in London in 2014, the share has a negative return of 99%.

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 - - on September 9, 2019

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