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(1st UPDATE) Fresh off Lance Gokongwei’s P2-billion capital injection and appointment as chairman, PhilWeb is betting big on a multibillion-peso gaming tech investment that could define its turnaround
MANILA, Philippines – The Philippine Stock Exchange (PSE) will suspend trading in PhilWeb Corporation starting Tuesday, September 8, after the gaming technology firm disclosed a multibillion investment in JKS Tech Solutions Inc.
PhilWeb said on Monday, September 7, that it and wholly owned subsidiary PhilWeb Capital Corporation had signed subscription agreements covering a combined 10.73 million Common B shares of JKS at P394 apiece.
PhilWeb itself will subscribe to 3.41 million JKS shares worth about P1.34 billion, while PhilWeb Capital will take another 7.32 million shares.
The scale is what makes this investment significant. As of June 30, PhilWeb reported just P548.46 million in total assets against P741.95 million in liabilities. This left the company with negative stockholders’ equity of P193.48 million.
Those figures, however, came before the completion of JG Summit tycoon Lance Gokongwei’s P2-billion capital infusion into PhilWeb.
Even before the big boost of capital that Gokongwei provided, PhilWeb had already begun improving operationally, returning to profit in the first half with net income of P60.97 million, compared with a P41.77-million loss a year earlier.
The PSE said the JKS deal falls under its rules covering substantial acquisitions and reverse takeovers and will suspend PhilWeb shares beginning 9 am Tuesday while waiting for the company’s required comprehensive disclosure.
Under PSE rules, the substantial acquisition provision applies when a listed company or its subsidiary acquires a direct or indirect interest in an unlisted company equivalent to at least 10% of the listed firm’s total book value. PhilWeb’s P4.23-billion investment blows past that threshold: it is roughly 7.7 times the company’s entire P548.5-million asset base as of end-June, before the Gokongwei capital infusion was factored in.
PhilWeb told Rappler that it respected the PSE’s disclosure process and had submitted the relevant filing on its investment in JKS Tech Solutions, adding that it would continue to provide the market with information through the proper regulatory channels.
“The transaction is part of PhilWeb’s strategy to strengthen its position as a digital gaming solutions and technology platform provider serving licensed operators,” PhilWeb told Rappler in a statement on Monday evening. “We believe the investment will support the Company’s recurring revenue base, expand its operating footprint, and advance its broader technology and digital infrastructure roadmap.”
Who is JKS?
PhilWeb described JKS as a “Philippine B2B technology, platform and digital infrastructure company serving licensed mid-market operators in the digital entertainment sector.”
Beyond PhilWeb’s relatively dry description of JKS as a technology and digital infrastructure company, Philippine Amusement and Gaming Corporation (PAGCOR) records reveal more about what the company actually does.
JKS is the PAGCOR-accredited gaming system administrator behind Epic Game, a regulated online gaming platform. Its approved offerings span traditional and electronic bingo, electronic casino games, sports betting, specialty games, and numeric games.
A two-way investment
Money and shares are moving in both directions. In a separate disclosure on Monday, PhilWeb said JKS agreed to buy 81.38 million PhilWeb treasury shares for P16.50 each, paying a total of about P1.34 billion. The shares to be acquired represent around 4.85% of PhilWeb’s issued and outstanding shares, giving JKS a meaningful stake in the listed company once the transaction is completed.
The P1.34 billion that JKS will pay PhilWeb almost exactly matches PhilWeb’s own P1.34-billion direct subscription to JKS.
PhilWeb Capital Corporation, meanwhile, will subscribe to a much larger P2.88 billion worth of JKS shares. Monday’s disclosures did not specify how the PhilWeb subsidiary would fund that investment.
Nevertheless, PhilWeb has raised significant fresh capital in recent months, which could help fund its latest multibillion deal. In June, Gokongwei agreed to personally invest about P2.03 billion in the company through common and redeemable preferred shares priced at P8 apiece. PhilWeb said at the time that the money would strengthen its capital base and give it greater financial flexibility, including for “expansion opportunities and investments.”
Gokongwei acquired 159.53 million common shares on August 27 and was appointed PhilWeb chairman on the same day, replacing Crisanto Roy Alcid, who remained a director. – Rappler.com
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Lance Spencer Yu
@lanceyu_
Lance Spencer Yu is a multimedia reporter covering the private sector, utilities, finance, economics, transportation, and tourism.
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