PhilWeb Corporation's decision to invest heavily in JKS Tech Solutions Inc. has prompted the Philippine Stock Exchange (PSE) to suspend trading of its shares starting September 8. This suspension follows PhilWeb's announcement of a multibillion-peso investment that raises significant regulatory concerns.
On September 7, PhilWeb revealed it had signed agreements for the subscription of 10.73 million common shares of JKS at P394 each. PhilWeb plans to acquire 3.41 million shares valued at approximately P1.34 billion, while its subsidiary, PhilWeb Capital Corporation, will subscribe to 7.32 million shares.
Regulatory Context and Financial Impact
The substantial acquisition provision applies when a listed company acquires a direct or indirect interest in an unlisted company equal to at least 10% of the listed firm’s total book value.
Philippine Stock Exchange
PhilWeb's investment of P4.23 billion far exceeds its asset base of P548.46 million as of June 30, raising alarms under PSE guidelines regarding substantial acquisitions. This investment comes shortly after Lance Gokongwei's P2-billion capital injection, which had already improved PhilWeb's financial standing.
- PhilWeb's total liabilities reached P741.95 million as reported in June.
- The company has transitioned from a P41.77 million loss to a P60.97 million profit in the first half of the year.
JKS Tech Solutions, described by PhilWeb as a B2B technology provider, is known for being the gaming system administrator for the regulated online platform, Epic Game. This platform offers a range of gaming options, including sports betting and electronic casino games.
Interestingly, the investment is reciprocal; JKS is set to purchase 81.38 million treasury shares from PhilWeb, indicating a strategic partnership. This deal, valued at about P1.34 billion, mirrors PhilWeb's own investment in JKS, suggesting a mutual commitment to growth.
With the recent financial backing from Gokongwei and the ongoing investments in gaming technology, PhilWeb aims to reposition itself in the competitive gaming landscape. However, it remains to be seen how regulatory bodies will respond to this substantial shift.