SINGAPORE (THE BUSINESS TIMES) - Spackman Entertainment Group has entered into a non-binding letter of intent (LOI) with the representative of a potential buyer keen to buy its Zip Cinema subsidiary.

Zip Cinema is a South Korean production house which originates, produces and invests in theatrical films. It is a major asset of Spackman, the company disclosed in a regulatory update on Tuesday (July 7).

The potential buyer is an unnamed content production company listed in South Korea. It is represented by accounting firm Charm Accounting Corporation in the same country.

Charm Accounting has advised South Korea-listed companies such as YG Entertainment, FNC Entertainment, Posco, Samsung Electronics and Lotte Group on the buy-side of mergers and acquisitions transactions.

The potential buyer is looking to acquire 16,790 common shares of Zip Cinema, which represent 100 per cent of the issued and outstanding shares of Zip Cinema's share capital. These shares are free and clear of all liens, claims and encumbrances.

Spackman and the buyer have yet to begin preliminary negotiations and no binding agreement has been entered into between both parties regarding the proposed deal.

Based on the LOI, the buyer has agreed to use its reasonable best efforts to negotiate in good faith with a view to executing a definitive agreement on or before Dec 31, 2020.

The proposed deal's consideration will be negotiated and agreed upon by Spackman and the buyer, subject to relevant regulations and necessary approvals by the Singapore Exchange and the Korea Exchange, as well as respective shareholders where applicable.

Spackman said its board intends to explore strategic alternatives for this major asset which the board believes will "unlock shareholder value".

"The entry into this LOI is one of the strategic options that the company will carefully consider," Spackman added.

Spackman shares were trading 0.1 cent or 10 per cent higher to 1.1 cents as at 3.03pm on Tuesday.