MiMedia Holdings Inc. Issues Subordinate Voting Shares to Settle Interest Payment on Convertible Debentures

MiMedia Holdings Inc. (TSXV: MIM) (OTCQB: MIMDF) (FSE: KH3) recently announced that it has issued 1,240,000 subordinate voting shares to settle the interest payment due on December 31, 2024, on its 10% Unsecured Convertible Debentures. This issuance was made at a Market Price of $0.25 per share, which was the price on December 31, 2024.

The issuance of these shares will have several implications for MiMedia's shareholders and financial health. First, the issuance of new shares will dilute the ownership of existing shareholders. This is because the number of outstanding shares will increase, while the earnings per share (EPS) remains constant or decreases. In this case, the dilution can be calculated as follows:

Dilution = (Number of new shares issued / Outstanding shares before issuance) * 100
Dilution = (1,240,000 / 73,750,000) * 100 ≈ 1.68%

This means that existing shareholders will see their ownership percentage decrease by approximately 1.68% as a result of the share issuance.

The issuance of additional shares will also impact MiMedia's EPS. Since the number of shares outstanding will increase, but the company's earnings remain the same, the EPS will decrease. This is because EPS is calculated as net income divided by the number of outstanding shares. For example, if MiMedia's net income for the year was $5.29 million, the EPS before the issuance would be $0.07 (calculated as $5.29 million divided by 73.75 million shares). After the issuance, the EPS would decrease to approximately $0.068 (calculated as $5.29 million divided by 75 million shares).

The issuance of shares will also have an impact on MiMedia's capital structure and financial leverage. The issuance of shares to settle the interest payment will reduce MiMedia's outstanding debt. As of December 31, 2024, MiMedia had approximately $6.40 million in total debt. The issuance of shares to settle the interest payment will reduce this amount by approximately $310,000 (the aggregate amount of interest paid). This reduction in debt will decrease MiMedia's financial leverage, as measured by the debt-to-equity ratio.

In conclusion, the issuance of 1,240,000 subordinate voting shares to settle the interest payment on MiMedia's 10% Unsecured Convertible Debentures will have several implications for the company's shareholders and financial health. The issuance will result in a dilution of approximately 1.68% for existing shareholders, a decrease in EPS, and a reduction in MiMedia's financial leverage. However, it is important for MiMedia to manage its capital structure effectively to ensure that it maintains a healthy balance between debt and equity financing.