Technology firm readies debt-equity conversion

Technology solutions provider DFNN Inc. is embarking on a capital restructuring program to wipe out around P643 million in deficit and allow the company to start declaring dividends soon.

In a disclosure to the Philippine Stock Exchange (PSE) Monday, DFNN said its board had approved the issuance of 8.3 million common shares to various existing shareholders through a conversion of loans into equity.

The board likewise approved to list on the PSE some 91.28 million common shares issued out of DFNN’s authorized capital stock as well as the 8.3 million new shares to be issued as part of the loan-to-equity conversion. The shares are worth close to P46 million at current market prices.

‘We recently increased our capital stock, allowing us to issue new shares to investors. The debt to equity conversion was pursuant to the agreement between the creditors and DFNN in order for the creditors to be shareholders of the company or to have more shares. Their acquiescence to the conversion demonstrates their faith in the future growth of the company,’ DFNN president and chief executive Ramon Garcia Jr. explained in a text message.

Likewise approved by the board was a ‘quasi-reorganization’ to clean up its books. The plan is to eliminate the company’s deficit in its retained earnings account by offsetting the deficit as of Dec. 31, 2014 against additional paid-in capital.

‘The quasi-reorganization was approved in order for DFNN to sooner move into a position to declare dividends,’ the company said.

Based on its annual report, DFNN incurred a P643-million deficit in 2014. ‘The quasi-reorg was thus proposed in order for DFNN’s reports to be truly reflective of the company’s financial standing, and with our disclosed rollouts and installations, allow us to positively improve our financial outlook and sooner move to be able to declare dividends,’ Garcia said.

Shares of DFNN rose by 3.2% to close at P5.48 per share yesterday following the disclosure, giving the company a market capitalization of close to P1.3 billion.