Jakarta. Film and television production company MD Entertainment (FILM), led by Manoj Punjabi, is set to acquire an 80.05 percent stake in TV network Net Visi Media (NETV) for Rp 1.65 trillion ($106.85 million), pending shareholder approval at an extraordinary general meeting on Oct. 4.

The acquisition will involve purchasing shares from existing shareholders as well as equity participation through a private placement, according to statements from both companies.

MD Entertainment has also outlined plans to increase capital by up to 10 percent without preemptive rights via a private placement, as detailed in the company’s filings on Thursday.

In addition to the acquisition, MD Entertainment will seek approval to expand its business into television broadcasting, following the NETV acquisition. A feasibility study on the new venture will be presented to shareholders during the meeting.

"The capital injection from MD Entertainment will provide much-needed financial relief for NETV, which has posted negative performance. NETV has consistently reported net losses since 2018, with negative equity since 2021," Stockbit Sekuritas commented in a review on Friday.

As part of its acquisition strategy, Net Visi Media will first carry out a reverse stock split at a 2:1 ratio on Oct. 22. This corporate action is necessary to meet the requirements for a private placement, which mandates that the price of new shares must not fall below the minimum trading price in the regular and cash markets.

Following the reverse stock split, MD Entertainment plans to purchase 75 percent of the debt-to-equity conversion claim held by Newton Capital Limited against NETV. Additionally, MD will subscribe to new shares through NETV's private placement, with a total transaction value of Rp 1.26 trillion. After this transaction, FILM will hold a 60.98 percent stake in NETV.

MD Entertainment also plans to acquire 7.9 billion shares, or 19.07 percent of NETV, from existing shareholders Teladan Investama, Indika Inti Holdiko, and Sinergi Lintas Media, in a deal valued at Rp 394.5 billion. Following the completion of this transaction, and factoring in the private placement, FILM will control 80.05 percent of NETV’s shares.

"FILM will become the new controlling shareholder of NETV but is exempt from the mandatory tender offer requirement, as the acquisition is intended to improve NETV’s financial position," explained Stockbit.