Gaming firm plans to offer P250 million worth of shares via IPO

REPORT FROM BUSINESSWORLD Pacific Online Systems Corp., a lottery systems and terminal supplier for the Philippine Charity Sweepstakes Office (PCSO) in the Visayas and Mindanao, will conduct an initial public offering (IPO) in March this year to raise capital to purchase new terminals. In a briefing with the press Tuesday, Pacific Online Systems Chairman and President Willy Ocier said the company would offer about P250 million worth of shares, or 25% of the company’s estimated P1 billion in market capital. The underwriters for the offering will be Asian Alliance Investment Corp. and BDO Capital & Investment Corp. The share offering will be entirely for domestic investors, and will be composed partly of primary and secondary shares, which will be listed at a par price of P1. The company will be listed in the first board of the Philippine Stock Exchange (PSE). The company will determine the exact amount of shares to be listed and will determine a price early in February, after its financial statements have been audited. Mr. Ocier said the proceeds from the offering would be used to purchase 600 new terminals for the deployment of the Keno online lottery, the first marathon lottery from 12 noon to 12 midnight daily. "We are targeting to have 1,500 terminals in Visayas and Mindanao by mid-2007," he said. Economy He noted that the strong Philippine economy made it an appropriate time for the company to have an IPO. "Our stock market is bullish, the peso is strong, and the Philippine economy is looking great." The company partnered with US-based company Scientific Games Corp. in 2005 to upgrade PCSO’s online data center and install 900 online lottery terminals in the Visayas and Mindanao. Early this year, Pacific Online successfully completed the $10-million upgrade of the traditional lottery system to the state-of-the-art lottery and terminal system. Mr. Ocier said the efforts of Pacific Online in "gaming stocks will always be attractive because of its profitability. Gaming is supposed to be one of the top revenue earners of any country. The illegal gaming market is big; if the government does not get its act together to organize gaming activities, it is a waste," he said in an earlier interview. Pacific Online Systems has its data center in Cebu, and is 43% owned by listed company Belle Corp., 37% owned by Abacus Global Technovisions, Inc., and 20% owned by Tanjong Public Ltd. Co., a Malaysian holding firm. It derives its revenues mainly by leasing online lottery equipment to the PCSO. In 2006, it reported gross revenues of over P400 million, up from P340 million in 2005. It also saw online lottery sales of P4.04 billion to PCSO in Visayas and Mindanao, up from P3.38 billion the previous year. It has posted P164 million in pre-tax profits in the past three years. — Allan E. Lalisan/BusinessWorld