IPVG board okays corporate restructuring, asset spin-off

MANILA, Philippines - Publicly-listed technology conglomerate IPVG Corp. said its board has approved the mechanics and terms of the group’s planned corporate restructuring which will involve the transfer of all assets and liabilities to a new private holding company.

Under the plan, IPVG will be transferring all its shares in 12 subsidiaries to the still unnamed private holding firm, which will be 70 percent owned by majority shareholders holding approximately 70 percent of IPVG.

The remaining 30 percent of the new company will be owned by IPVG Employees Inc. which, in turn, will donate the new shares to IPVG minority or public shareholders in the same number and proportion as their shareholdings in the technology conglomerate.

According to IPVG, the assets would be transferred at a price which shall not be less than the carrying cost in the corporation’s books with respect to the shares of the listed subsidiaries and the book value as of the latest audited financial statements of the non-listed subsidiaries.

By spinning off its assets, IPVG will be in a position to take in new investors to fund ventures into new and more profitable businesses.

Shareholders will own shares in both IPVG and the new private firm.

The rationale for the corporate restructuring is to attract new investors and enhance IPVG’s value.

IPVG chief executive officer Enrique Gonzalez said the group is planning on taking all its subsidiaries public beginning with its online gaming unit IP E-Games.

IP E-Games has further beefed up its presence in its digital consumer platform with the acquisition of Netopia, the largest Internet cafe chain in the country, as well as CyBr and I.T. Log chains, giving it a network of around 200 Internet shops.

Aside from these, IP E-Games also owns Station 168 and i-Hooked brands of i-cafes, which together with Netopia, CyBr and I.T. Log hit over 2.5 million customer visits every month.

Outside the gaming business, IPVG continues to expand its remittance business under the Western Union brand with a total of 407 outlets as of July 1, 2011.

IPVG started in 2005 with less than 30 people and a single subsidiary with under P100 million in revenues. It has now grown into a group of over 12 companies including IP Services and Internet Security, IP Converge Data Center Inc., Prolexic Technologies, IP E-Game Ventures Inc., X-Play Online Games Inc. I-Pay Commerce Ventures Inc.

In 2010, IPVG posted a net income of P145 million, a reversal of the P244 million loss incurred a year earlier mainly on gains from asset sales and strong growth of subsidiaries.

Company officials expect its net earnings to increase this year with contributions from Netopia.

IPVG’s improved cash flow has enabled the company to substantially cut its debt to P190 million from P390 million in 2009, or a 51 percent reduction.