Now to offer P1B worth of preferred shares

Technology service provider Now Corp. has obtained board approval to raise as much as P1 billion through an offering of preferred shares, proceeds from which will fund internet services to be rolled out to residential areas and small businesses in Metro Manila.

Now, led by businessman Mel Velarde, aspires to be a bigger player in the IT and telecommunications industry by employing “guerilla” tactics against the existing duopoly.

In a disclosure to the Philippine Stock Exchange yesterday, Now said its board had agreed to raise, by way of a follow-on offering, up to 10 million redeemable, convertible, nonparticipating and nonvoting preferred shares with detachable warrants.

The offer size is at least P500 million, which can be increased to P1 billion in case of strong demand. Each preferred share will be offered at P100.

The preferred shares will come from the unissued portion of the company’s authorized capital stock and up to 20 million detachable warrants to be issued free of charge with 20 million underlying common shares.

A warrant confers the right, but not the obligation, to buy or sell a security at a certain exercise or strike price before expiration.

The holder of the proposed preferred shares may convert all of the holder’s outstanding shareholdings of the preferred shares to common shares of Now at a conversion price of P20 per share between the end of the third and fourth anniversary of the preferred shares.

Holders of the preferred shares will have no preemptive rights to subscribe to any shares—including treasury shares—that will be issued or sold by Now.

Each application will be for a minimum of 500 preferred shares and thereafter, in multiples of 100 preferred shares.

On the warrants, Now will offer up to 10 million of warrants without oversubscription and maximum of 20 million warrants with full exercise of the oversubscription, or two warrants per preferred share. The warrants will have a strike price of P10 over the exercise period.