Digital media company XLMedia PLC (AIM:XLM, OTC:XLMDF) took a nosedive on London's AIM junior market on Monday as the businesses' winding up plans revealed a sore spot for investors.
The business is in the process of returning cash to its shareholders through a tender offer as it transforms into a non-trading cash shell.
It was in line to receive $15 million via an earnout agreement following the disposal of its European and North American operations.
However, XLMedia has disclosed that the earnout is only expected to bring in between $3 million and $4 million, and possibly $5 million in a best-case scenario.
The tender offer of $20 million represents approximately half of XLMedia’s anticipated post-expenses cash reserves.
“The board wishes to maximise the return of value to shareholders while ensuring that the group's operations are brought to an orderly close, and are reviewing the structure of the board in overseeing the efficient winding down of the group,” said XLMedia’s independent non-executive chair Marcus Rich.
Shares fell 24% to 9.45p on Monday.