Technology firm Xurpas Inc. has given up its majority stake in IT solutions provider Yondu Inc. and likewise dissolved its celebrity-themed mobile gaming business Xeleb as part of group-wide streamlining efforts to claw its way back to profitability.
Xurpas sold back its 51-percent shareholdings in Yondu Inc. to partner Globe Telecom for P501 million in cash. Yondu once again becomes a wholly owned subsidiary of Globe.
“Our divestiture of Yondu will provide the company additional liquidity [for us to] retire debt and … to focus on high-value, emerging, innovative and disruptive technologies and platforms impacting both enterprise and consumer commerce,” Xurpas president Alexander Corpuz said in a disclosure to the Philippine Stock Exchange on Wednesday.
Yondu was a leading content developer and provider of mobile value-added services and information technology services back in 2015 when it was acquired by Xurpas. It has since then evolved to become a top IT solutions company in the Philippines, expanding its product portfolio to provide managed services, software development and turnkey solutions.
“Xurpas’ financial condition will be materially affected considering that substantial revenues of the group is attributed to Yondu’s performance. Regardless, Xurpas’ Management considers the sale strategic taking into account its ongoing corporate restructuring. Moreover, Xurpas management considers the sale necessary taking into account Xurpas’ current financial condition,” Xurpas said.
Xurpas has been operating in the red since 2018, when it incurred an attributable net loss of P765.79 million compared to a net profit of P35.76 million in 2017. It had to write down bad debt of Singapore-based subsidiary Art of Click last year alongside other impairment losses. In the six-month period ending June this year, Xurpas incurred an attributable net loss of P118 million compared to a net loss of P137 million last year.
As such, Xurpas was expected to make “tough decisions” to clean up and streamline to return to profitability.
For his part, Globe Telecom president Ernest Cu said: “Bringing Yondu into the Globe value chain will promote synergies and strengthen the position of our enterprise business.”
Aside from unloading its stake in Yondu, Xurpas also obtained approval from its board to dissolve Xeleb Technologies Inc. and Xeleb Inc., both of which have no significant contribution to the Xurpas group to date.
The mobile consumer business of Xurpas Group substantially declined due to the new policies implemented by telcos for all value-added service providers, the disclosure said.