AirMedia Group Inc (NASDAQ: AMCN) is headed for the top in the market this morning after the company announced asset sale news. The sale will not only generate revenue, but creates an important relationship that could lead to strength in the future. Today, we’ll talk about:
- The asset sale news;
- what we’re seeing from AMCN stock as a result; and
- what we’ll be watching for ahead.
AMCN Announces Asset Sale News
As mentioned above, AirMedia Group is having a strong start to the trading session this mornign after announcing an asset sale. In a press release issued early this morning, the company announced that it has entered into an agreement with Jiangsu Hong Zhou Investment with regard to its Beijing Linghang Shengshi Advertising Co. subsidiary.
In the release, AMCN said that Jiangsu Hong Zhou Investment will buy 20.32% of the company in exchange for RMB200 million. The payment will be made in three installments. The first RMB50 million will be paid within 3 days after the execution of the agreement. The next payment of RMB100 will be paid within three working days after the completion of the industrial and commercial registration proceedure. Finally, the last RMB50 million will be paid within 30 days of the industrial and commercial registration procedure.
The agreement may lead to payments of up to RMB380 million, the remainder of which is subject to certain conditions. The remaining funds will be paid within 3 working days after the receipt of approvals granted by the securities regulatory department with respect to the listing/restructuring applications.
In the release, AMCN Also announced that it will be terminating its business on buss Wi-Fi networks and gas advertising business. The company also plans to cut down its train Wi-Fi networks business and may terminate this business in the future.
In a statement, Herman Guo, CEO at AMCN, had the following to offer:
The sale of the remaining equity of AM Advertising and the realignment of our business components put us on the right tracks further into the new chapter of our future… The realignment empowers the Company to reallocate its resources to further focus on the technological development, system integration, operational management, data analysis and business innovation in providing Wi-Fi inflight. It is our mission as a vanguard of the inflight Internet business to enable airlines and other partners to embrace the advent of a new chapter in the inflight connectivity.
What We’re Seeing From The Stock
As investors, one of the first lessons that we learn is that the news leads to moves in the market. When it comes to AirMedia, the news proved to be positive. The sale will lead to an immediate and substantial injection of funding into the business, giving the company a strong foundation to grow upon. The announcement of the termination of some Wi-Fi businesses also means that the company will have more of an ability to focus on more profitable assets. So, it comes as no surprise to see that excited investors are pushing the stock for the top. Of course, our partners at Trade Ideas were the first to alert us to the gains. Currently (9:34), AMCN is trading at $0.40 per share after a gain of $0.024 per share or 6.48% thus far today.
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What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to keep a close eye on AMCN. In particular, we’re interested in following the story surrounding the company’s continued work to restructure and build upon its more profitable assets. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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