Cashrounds to raise P1.25B for Next Mobile expansion

Publicly listed Cashrounds will be raising at least P1.25 billion ($25 million) by the second half of this year primarily to finance the expansion of its wireless subsidiary Next Mobile Inc. (NMI).

Cashrounds earlier entered into a memorandum of agreement with the five controlling shareholders of NMI to swap shares that would result in NMI shareholders gaining control of Cashrounds to the extent of 99 percent and the latter in turn owning 97 percent of NMI. The parties agreed on a closing date of July 31, 2006.

The five controlling shareholders of NMI are Top Mega Enterprises, Joycelink Holdings, Gamboa Holdings, Emerald Investments, Food Camp Industries and Marketing. Cashrounds will issue new shares of stock in exchange solely for the NMI shares owned by these five companies.

The swap of shares is subject to certain conditions, including obtaining the necessary corporate and regulatory approvals such as those from the Securities and Exchange Commission (SEC) for the increase in authorized capital and amendment of the articles of incorporation (Cashrounds will change its primary purposes from online matchmaker to information technology), the Philippine Stock Exchange, and the Bureau of Internal Revenue (the transaction being a tax deferred exchange of shares).

Cashrounds is currently owned two-thirds by Gamboa Holdings and the remainder by Amalgamated Investments. Their stakes will be reduced to around one percent once the share swap between Cashrounds and the NMI shareholders takes effect.

NMI chief executive officer Mel Velarde said the P1.25 billion will be raised either through equity or debt financing or both. In the case of equity financing, it will be either through the issuance of new shares (one to two billion secondary shares) or primary shares or a combination.

Velarde, who is also president of Cashrounds, disclosed that the proceeds will be injected back into operations and to finance expansion.

The National Telecommunications Commission (NTC) issued last March to Cashrounds a certificate of registration as a value-added service (VAS) provider. It likewise granted NMI authority to provide cellular mobile telephone system (CMTS) service.

With the impending acquisition by Cashrounds of the controlling stake in NMI, the former will be changing its name to Information Capital Technology Ventures Inc. (ICTV) and will apply with the Philippine Stock Exchange for transfer from the SME board to the First Board.

Cashrounds will be increasing its authorized capital stock from P100 million to P7 billion in order to accommodate the expected new issuance of shares. For purposes of the intended swap of shares, NMI shares owned by the five shareholders will have a value of P6.58 billion while the issued and outstanding shares of Cashrounds shall have a value of P28 million on closing date.

Velarde explained that with NMI soon to be owned by a listed company, the former will have a platform to raise new money, hopefully immediately after the share swap in July.

He also noted that with the acquisition by Cashrounds of NMI, investors interested in the latter will now have a vehicle to own listed shares.

Cashrounds is also working with NMI and IMX Broadband Inc. for purposes of research and development in connection with the plan to expand the listed entity’s existing information technology platform in order to introduce related products and services and integrating wireless communication technologies.

Cashrounds is presently engaged in online matchmaking which entails matching businesses with fund sources. Velarde said areas of expansion include BPOs (business process outsourcing), software development, and providing content to other telcos.