KUALA LUMPUR (July 10): Bursa Malaysia has rejected MMM Group Bhd's (KL:MMM) proposed regularisation plan to exit its Practice Note 17 (PN17) status amid concerns about its proposed RM16 million acquisition of outdoor advertising company EDSB Outdoor Sdn Bhd, the cornerstone of the plan.

In a bourse filing, MMM said Bursa had informed the company via a letter on Friday that it was not satisfied that the proposed regularisation plan complied with listing rules, in that it be fair and reasonable to the company and its shareholders, and result in sustainable value enhancement.

Bursa highlighted that the RM16 million purchase consideration represented a substantial premium over EDSB's net assets of about RM800,000 as at Dec 31, 2025. Including plans to convert 26 of EDSB's 228 static billboards into digital billboards, the total investment required by MMM would amount to RM22.16 million.

Although EDSB founders Chong Yoke Lai and Gan Soon Choon have provided a profit after tax guarantee of RM2 million annually for the financial years ending Dec 31, 2026 (FY2026) to 2028 — RM6 million in total — the guaranteed earnings are significantly lower than the acquisition price and did not sufficiently demonstrate the company's long-term earnings sustainability beyond the guarantee period, Bursa noted.

The stock exchange also raised concerns over the acquisition being a full-cash transaction, leaving the vendors with no equity participation in the enlarged MMM and no exposure to the future risks and performance of the business.

"Accordingly, it is not evident that the proposed acquisition adequately safeguards the interests of MMM and its securities holders or that it will result in a sustainable enhancement in shareholder value as envisaged under Paragraph 5.4(c) of PN17," Bursa said.

Bursa also questioned the sustainability and viability of EDSB's business, noting that its revenue declined to RM6.09 million in FY2025 from RM8.62 million in FY2023, while the company recorded losses in three of the past four financial years.

The target company also had licensing issues, with only 62 of its 228 billboard sites currently holding the necessary advertising licences and permits.

While completion of the acquisition is conditional upon EDSB obtaining approvals for 144 operating sites, the company expects to secure these only by the second quarter of 2027, potentially delaying implementation of the regularisation plan, Bursa noted.

So, MMM could incur additional costs and resources to regularise the remaining 84 sites and face potential regulatory risks if approvals are not obtained, Bursa said.

It also noted that MMM intends to spend RM12.16 million over 36 months to convert 26 static billboards into digital billboards. This suggests substantial additional capital expenditure would be needed should it seek to convert the remaining sites.

While the group's proposed capital reduction would eliminate accumulated losses of RM32.65 million and improve shareholders' equity to about RM42.8 million, the improvement stems largely from “accounting adjustments rather than sustainable operating profitability”, Bursa noted.

MMM failed to demonstrate to its satisfaction that the circumstances that led to its PN17 categorisation had been comprehensively addressed, or that the risk of the company falling back into financial distress had been sufficiently mitigated, the stock exchange added.

MMM has until Aug 9 to appeal against Bursa's decision. Failing that, or if the appeal is unsuccessful, the company's securities will be delisted two market days after notification from Bursa.

The EDSB acquisition was announced in August 2025. MMM, formerly known as Asia Media Group Bhd, slipped into PN17 status in October 2019 after its shareholders' equity fell below 25% of its issued share capital.

The regularisation plan included a rights issue with free detachable warrants and a private placement to raise up to RM39.97 million, alongside a 10-for-one share consolidation. Grand Portfolio Sdn Bhd, controlled by Chen Jui-Liang, undertook to subscribe for at least 108.33 million rights shares, which would raise its stake in MMM to 30.81% from 12.51%.

MMM had planned to use part of the proceeds to the EDSB acquisition.

Shares of MMM Group were last traded at 1.5 sen, valuing the group at RM4.7 million.