On Factor Bringing AirMedia Group (AMCN) Stock Down

NEW YORK (TheStreet) -- Shares of AirMedia Group (AMCN) were falling 13.6% to $6.27 on heavy trading volume Monday after the Chinese marketing services firm announced it will sell a 75% equity interest of its advertising business.

AirMedia said it will sell the 75% equity interest in AM Advertising to Beijing Longde Wenchuang Fund Management for RMB 2.1 billion in cash.

The consideration will be made in two installments. The first installment of RMB 800 million will be paid within 15 workings days of the execution of the agreement. The second payment of RMB 1.3 billion will be received after Beijing Longde Wenchuang Fund Management confirms the audit report of the restructured AM Advertising and certain preconditions are met.

"We believe the terms of the Transaction with Longde Wenchuang are preferable compared with the terms we received or discussed with other potential buyers as we will receive the Consideration all in cash, in a much faster and predictable manner," AirMedia Chairman and CEO Herman Guo said.

About 2.6 million shares of AirMedia were traded by 10:11 a.m. Monday, above the company's average trading volume of about 1.6 million shares a day.

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."

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