Music Corp cuts capital deficiency by more than half to P102M

Publicly-listed Music Corp. has managed to reduce its capital deficiency to P102 million from P344 million last year.

In a disclosure to the Philippine Stock Exchange, Music said it expects to further reduce its capital deficiency to P32 million by end-June next year, with profits projected to reach P70 million for the period Oct. 2003 to June 2004.

This as new orders from customers for the third quarter totaled P128 million, up by 124.56 percent from the previous year’s P57 million.

Despite this, management remains extremely cautious due to the continuing lack of visibility in the market, evidenced by customers’ unwillingness to place longer term purchase orders.

The company is undertaking a number of fund-raising activities as part of efforts to return to capital surplus by June 2004. Unicapital Inc. was tapped as financial adviser for its planned capital-raising activities.

Music plans to raise between P60 million and P90 million in additional capital from the issuance of new shares to fund product engineering and development.

The issuance of new shares will come from the firm’s increase in capital stock following a quasi-reorganization of the capital structure.

The company will set aside 6 million share options from the increase in the authorized capital stock to be granted and distributed upon recommendation of the compensation committee.

The quasi-reorganization is in line with Music’s plan to absorb the operations of wholly-owned subsidiary Music Semiconductors Phils. Inc. (MSPI).

Along this line, the firm will change its name to Music Semiconductors Corp. and amend its primary purpose to manufacturing from that of a holding company.

Music was formerly Music Semiconductors Corp. (whose name is an acronym for Multi User Specialty Integrated Circuits). It was incorporated in the Philippines in Jan. 1992 as a subsidiary of MUSIC NV, its Dutch parent.

MUSIC NV is located in the Netherlands, where it was founded in late 1989. In Nov. 1993, Music Corp. became the parent company as a result of the acquisition of a major stake in the company by Asian investors and an exchange of shares by existing shareholders.

Music is an investment holding company specializing in identifying key "early state" companies in the networking infrastructure, telecommunications and internet markets and developing them into mature investments in these communication industry segments.

Music’s focus is to identify promising early stage companies and through financial support and management oversight, to nurture and develop them to the level at which they become attractive prospects of investment banks or strategic acquisition candidates of other companies.