HONG KONG — Reliance MediaWorks, the Indian production services and cinema group, has seen its shares tumble for two successive trading sessions, after the company announced a heavily diluting rights issue to raise up to $101 million (INR6 billion).
After business hours on Monday the company finally set out the details of its long-awaited cash raising exercise. It revealed an offer of 13 new shares, to be sold at INR 40 each, for every 4 shares currently in existence.
The stock had traded at INR57 before the issue details, but has since twice slumped by the maximum daily trading range of 5% on the Bombay Stock Exchange. The shares closed Wednesday at INR 52.9.
RMW has sought to become a dominant player in digital facilities and now has an empire spanning: digital post-production services; content processing, image enhancement and restoration services; visual effects; 2-D to 3-D conversion services in the US, UK and India; and an 8-stage film studio in Mumbai.
In September last year it was announced that RMW would be the junior partner in a joint bid with China’s Beijing Galloping Horse conglomerate to rescue bankrupt US visual effect group Digital Domain.
But a continuing spate of losses at RMW has meant multiple cash raising exercises for the Indian company. The previous CEO Anil Arjun departed in Aug last year and was replaced by incumbent Venkatesh Roddam.
A rights issue had been approved by the RMW board as far back as 2011, but tricky stock market conditions and the company’s unhealthy outlook meant that it was postponed.
In the first quarter of this year RMW lost $26.1 million. In the second quarter, the three months to June, losses climbed to $37.1 million.