NEW YORK (TheStreet) -- Shares of AirMedia Group (AMCN) were gaining 35.4% to $4.80 on heavy trading volume Friday morning after the Chinese advertising company received a "going private" proposal.

A group led by AirMedia Chairman and CEO Herman Man Guo sent a non-binding proposal letter to the company's board of directors offering to buy all outstanding ordinary shares of the company they do not own for $6 an America Depositary Share in cash. The offer represents a 70.5% premium over the company's Thursday closing price.

Guo and the buyer group plan on funding the potential transaction with a combination of debt and/or equity capital as well as rollover equity in the company.

AirMedia's board form a special committee of three independent and disinterested directors to consider the proposal to take the company private.

TheStreet Recommends

About 4.1 million shares of AirMedia were traded by 9:35 a.m. Friday, well above the company's average trading volume of about 2 million shares.

TheStreet Ratings team rates AIRMEDIA GROUP INC -ADS as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate AIRMEDIA GROUP INC -ADS (AMCN) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its solid stock price performance and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Compared to its closing price of one year ago, AMCN's share price has jumped by 210.66%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • AMCN has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.32, which illustrates the ability to avoid short-term cash problems.
  • AMCN, with its decline in revenue, slightly underperformed the industry average of 3.8%. Since the same quarter one year prior, revenues slightly dropped by 4.3%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • AIRMEDIA GROUP INC -ADS has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, AIRMEDIA GROUP INC -ADS reported poor results of -$0.44 versus -$0.18 in the prior year. For the next year, the market is expecting a contraction of 14.5% in earnings (-$0.50 versus -$0.44).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Media industry. The net income has significantly decreased by 62.0% when compared to the same quarter one year ago, falling from -$3.51 million to -$5.68 million.
  • You can view the full analysis from the report here: AMCN Ratings Report