Next Mobile acquires controlling stake in PEP

The owners of telecommunications company Next Mobile Inc. (NMI) are acquiring a controlling stake in publicly listed Premier Entertainment Productions, Inc. (PEP) via a share swap agreement.

The backdoor listing is aimed at raising funds to finance NMI’s expansion program to improve its nationwide coverage and as well as plans to go into other allied businesses, official sources said.

Just recently, NMI and PEP entered into an agreement to allow for the backdoor listing of the former in the local stock exchange. PEP is a company engaged in the entertainment business while NMI is the country’s first and only fully integrated digital wireless operator that offers digital two-way radio and mobile telephone, data services, and messaging. NMI utilizes a transmission technology developed by Motorola called iDEN (integrated digital enhanced network) technology.

NMI legal counsel Justin Adviento said the nature of the transaction is a backdoor listing in favor of Next Mobile. "The mechanics of the transaction is through a share swap agreement between PEP and the controlling shareholders of NMI," he explained.

The intent of the transaction is to converge PEP’s business focus of entertainment with the high growth wireless telecommunications industry. Among the candidates for backdoor listing, PEP was chosen by NMI because of the opportunity for convergence in the entertainment sector with the telecommunications industry, Adviento added.

As part of the transaction, which is awaiting approval from the shareholders of the two companies, PEP will acquire around 97 percent of the post quasi-reorganization outstanding capital stock of NMI for P6.58 billion.

NMI officials explained that about 12.7 billion shares of PEP, or 96.07 percent of total, will be issued to NMI’s existing shareholders as payment. This will make the owners of NMI the controlling shareholders of PEP, which will in turn control NMI.

The 12.7 billion shares of PEP are valued at around P6.35 billion or 50 centavos per share. The board of directors of PEP have approved a reduction in par value from P1 per share to 50 centavos per share to reduce PEP’s accumulated deficit of P289 million to P29 million as of Dec. 31, 2002.

The owners of Next Mobile are a group of Finnish, Swedish, American and Filipino techno-entrepreneurs led by ICT expert Mel V. Velarde. NMI’s major shareholders are Top Mega, Emerald Investments, Gamboa Holdings, Jetcom, Joyce Link Holdings, and Foodcamp Industries & Marketing Corp.

Meanwhile, Adviento clarified that the deal for the acquisition by Next Mobile of a majority interest in Capwire expired last July 31 with neither of the parties signifying any further intentions to pursue the transaction.