DFNN deal with Singaporean technology firm hits snag

MANILA, Philippines - A plan by Singaporean technology services provider Fastech Synergy Ltd. to acquire 100 percent of locally listed Diversified Financial Network Inc.’s overseas gaming technology arm Pacific Gaming Investments Pte. Ltd. (PGI) for $91 million is experiencing rough sailing.

DFNN revealed yesterday it received communication from Fastech that the proposed structure for the reverse takeover through the acquisition of PGI Pte. was deemed not acceptable under the listing rules of the Singapore Stock Exchange.

It informed the Philippine Stock Exchange (PSE) that Fastech is reviewing all of its options, including requesting reconsideration from the Singapore bourse, or whether the respective boards of DFNN and Fastec need to eventually mutually agree to terminate the agreement between the two companies.

PGI is 70 percent owned by DFNN and is registered in Singapore.

Under an agreement signed by DFNN and Fastech, the latter will buy a minimum of 70 percent of PGI via a stock swap.

DFNN also pledged to try its best to help Fastech buy the remaining 30 percent owned by minority PGI shareholders.

Fastech will issue 1.8 million shares, giving PGI a pre-acquisition value of $80 million. The shares will be distributed by way of property dividends of Fastech Synergy Philippines.

Fastech has a state-of-the-art manufacturing complex in Cabuyao, Laguna.

The post-acquisition enterprise value of PGI was estimated at $91 million for about 88.88 million shares.

PGI was established by DFNN in 2000 to expand the company’s operations to other highly populated South and Southeast Asian countries with promising e-commerce and business process outsourcing (BPO) prospects.

DFNN saw the opportunity as more countries in Asia started to legalize their gaming industries.

The company is paid a percentage of gross bets or net gaming for the provision of its systems, technologies and content.

DFNN, which was incorporated in 1999, was one of the first information technology companies to list on the PSE.

Earlier, DFNN received a non-binding term sheet from Cowson Holdings Ltd. and Kirschner Games International Inc. (KGI), a Philippine company.

Cowson, a Macau based company, shall invest a maximum of $3 million in primary shares of DFNN at an agreed price of P25 per share.

The primary investment into DFNN will be used to partially fund a purchase of a still to be determined amount of shares in KGI. KGI supplies technologies and systems for use in the Philippine Amusement and Gaming Corp.’s gaming operations.

Under the term sheet, the parties have agreed to allow Cowson to assist in managing the operations of KGI under an appropriate management agreement.

Cowson’s management is composed of successful and experienced technology and gaming executives from Macau.

Another  $3 million will be used to purchase DFNN secondary shares from the open market with the view of acquiring a board seat.

Cowson shall also have the option to invest a further $7 million in shares of PGI. It also committed an additional $7 million to fund the operations of KGI with respect to fully developing gaming provision and technology business.