Shareholders on Thursday gave Main Event Entertainment Group the nod to increase its authorised share capital to an unlimited amount, a move that typically signals a company is ready to tap the market for additional capital.

However, Chairman Ian Blair has cautioned that those plans may not be immediate, and has declined to confirm whether an additional public offering (APO) or rights issue is on the cards for the entertainment company. But subtle languages used by the Chairman suggests that the company may be heading back to the market.

“It’s a pre-emptive move,” he said, adding that when the opportunities arise, based on how Main Event sees the environment, it will be able to move swiftly in that direction.

Main Event currently has ordinary shares of 300,005,000 already issued and authorised share capital of 320,004,000. It means that prior to Thursday’s approval, the company would be restricted to issuing an extra 19,999,000 ordinary shares if it wanted to raise additional capital via equity.

At Thursday’s closing price of $12.59, those extra shares, if issued today, would bring in an additional $251 million. Still, the shares would likely be offered at a discounted price if the company were to conduct an APO.

That’s just half of the cash injection the entertainment company is targeting to act on its growth projects based on past declarations made the company heads.

Main Event had signalled its intention to go after “opportunities” in the entertainment industry as early as 2022 when the economy started to revive from the COVID-19 lull and the demand for concert equipment increased.

“I wish I had low-interest money now to expand Main Event, because I feel so confident now,” CEO Solomon Sharpe said at the time during a JCC confidence indices forum.

“We are looking for $500 million of low-interest money. So we are going to be aggressive,” he continued.

The approval by shareholders to raise the company’s authorised share capital allows Main Event, a Junior Market listed company, to access the current limit of up to $500 million when it goes back to market. Back in 2017, the company raised $120 million from its initial public offering (IPO).

As at April 30, 2024, Main Event had share capital of $103,652,000 thereby allowing room for $396.3 million in additional equity based on current market rules. However, the board may decide to delay tapping the market over the next few months, giving the company time to unlock a further $250 million in equity funding, should the Government uphold its promise to increase the capital threshold of Junior Market companies from $500 million to $750 million.

Amendments to the Income Tax Act to enact that change were expected to have been implemented between April and June 2024.

“We are always looking for opportunities, that’s what our shareholders expect us to do…

“In looking at opportunities one of the main things that we will look at is if the opportunity going to be significantly beneficial to the company. We don’t want to jump at an opportunity just because it’s an opportunity. Is it a good fit for the company? If so, fine. There are opportunities out there, but we don’t want to say what they are at this time,” Dr Blair said in responding to queries from a shareholder.

The resolution for an increase in authorised shares comes at a time when Main Event is restrategising how it targets clients amid squeezed margins from growing competition in the industry. Its financial performance for the quarter ending April shows a 21 per cent dip in revenue to $418.6 million from $531.9 million in the prior year. Meanwhile, quarterly net profit plummeted from $74 million in 2023 to $20 million.

Instead of going after small and medium events, Main Event intends to double down on supplying equipment for large events.

Since a significant portion of its business comes from outdoor events, the entertainment company is also concerned about changes in the climate, along with dips in economic activities which are partly being blamed on rising interest rates.

“If you read the results from Don Anderson’s poll, CEOs are saying that there has been a decline in business. We watch these sorts of things very carefully…” Dr Blair said.