SEC okays EasyCall’s P100-M capital hike

The Securities and Exchange Commission (SEC) has approved the P100-million capital increase of EasyCall Communication Philippines Inc. (ECPI) to pave the way for the entry of a new strategic investor, the Transnational Diversified Group of the Delgado family.

Based on SEC documents, more than half or P52 million of the total increase has been subscribed to and fully paid-up by Global e-Business Solutions Inc., the information technology subsidiary of TDG.

The former frontrunner in the slowly declining paging business, the publicly-listed ECPI has resorted to the capital raising scheme due to its immediate need to finance its new thrust – its transformation and expansion into a contact center, data center and other IT-enabled outsourcing services.

ECPI said that based on its latest audited financial statements, the decline of the paging business will be difficult to arrest unless the company expands fast into other businesses.

The company had racked up its losses last year, leading it to write-off P191 million worth of transmission network assets and close down 10 of its provincial paging sites.

ECPI said the move would properly reflect the future non-recoverability of these assets as it has resigned itself to the fact that the huge investments made in 16 paging networks with a capacity of more than 300,000 subscribers canot be fully recovered with the substantial decline in subscriber base.

With the additional share issue, ECPI’s controlling shareholders (McMail Inc., Matrix Telecoms Asia and Modesto Cervantes) will waive their rights to subscribe to the new shares in favor of Global E-Business.

Based on their agreement, GEBSI will subscribe to 52 million new ECPI shares at a par value price of P1 each, instantly making it a 33 percent stakeholder in the paging operator.

The agreement also includes an option to exercise 30 million fresh subscription warrants at a strike price of P1.15 each within three years after issuance. This option would expand GEBSI’s exposure in ECPI to 42 percent.

The TDG conglomerate also has investments in other IT companies like Hatchasia, an Internet incubator and training center ; Intelligent Wave Phils. Inc, a software development company; and DFNN, the country’s first online financial application service provider.

The private placement will generate an initial P52 million and another P34.5 million upon full exercise of the warrants for a total consideration of P86.5 million, which ECPI will use to finance and support its new business.

In addition, ECPI will grant its minority shareholders currenty possessing over six million shares the pre-emptive rights to purchase an equivalent of 3.358 million new shares at P1 par value within 30 days from approval, to protect their percentage shareholding.