Listed film outfit Premiere Entertainment Productions Inc. is raising its capitalization to P2.5 billion to facilitate the issuance of shares to shareholders of Digiwave Solutions Inc., (PEP) a leading online gaming and software development firm.
PEP late last month signed an agreement to acquire 100 percent of Digiwave in exchange for the issuance of 1.003 billion shares to the online gaming firm’s shareholders.
In turn, Digiwave shareholders S. Capital Corp., Jun Ku Lee, Microgames Co. Ltd., Star International Ltd. and OFT Lending Inc. will infuse up to P200 million in fresh capital into PEP.
In a disclosure to the Philippine Stock Exchange, PEP said the new capitalization will consist of 2.5 billion common shares at a par value of P1.
PEP also approved the subscription of up to 425 million common shares out of the increase in its authorized capital stock by way of cash and/or assignment of 149,463 shares of Digiwave.
In addition, PEP will subscribe to 703.592 million common shares after the increase in capital stock by way of assignment of 350,537 Digiwave shares.
The share swap is anchored on Digiwave’s projected net income of P125.5 million this year given a price earnings multiple of eight times.
PEP’s board of directors also approved the change in corporate name to Premiere Entertainment Philippines Inc. to reflect its diversification into other businesses.
The board actions are subject to the approval of PEP’s shareholders in the annual stockholders’ meeting scheduled on April 10.
The acquisition of Digiwave will mark PEP’s entry into the online casino gaming industry which is currently the fastest growing business in the world, registering over $8 billion to $9 billion in revenues in 2006 and is expected to grow further to $12 billion by 2010, driven by the increase in broadband connections higher PC penetration and more connected console video game systems.
Established in 2006, Digiwave seeks to establish itself as the market leader in Internet gaming software in the Philippines and eventually compete in the international arena anchored on its proven expertise, experience and innovations in interactive gaming and entertainment.
Digiwave chairman Jung Ku Lee said his company is currently the second biggest supplier of games through PhilWeb. The company has already developed two games, Baduki and 7-Card Stud poker, which are deployed at all PEGS (Pagcor E-game stations branches of the Philippine Amusement & Gaming Corp. in Metro Manila.
Digiwave is seeking to take a leading position in the industry with new game offerings, such as Texas Hold ‘Em.