DFNN vows turnaround to avoid delisting
DFNN Inc. has vowed to regain financial strength in the next year to avoid being kicked out of the local bourse. The technology investment firm cited anticipated gains from its investments, particularly in lottery operations.
The company led by businessman Ramon Garcia Jr. outlined to the stock exchange on Wednesday its business plan and capital recovery program. It aims mainly to reverse its negative stockholders’ equity.
This essentially means that DFNN’s liabilities exceeded its assets, resulting in stockholders not getting any share in the company’s earnings.
Based on its 2024 annual report, DFNN has P2 billion in total liabilities versus P1.73 billion in total assets. As a result, its stockholders’ equity was at negative P225.93 million.
This puts it at risk of involuntary delisting from the local bourse under the Philippine Stock Exchange’s (PSE) rules.
However, companies like DFNN are given the chance to recover under PSE Guidance Note 24.4, which requires those with negative stockholders’ equity to submit a detailed plan within 60 days from receipt of a notice from the exchange.
Within one year, these companies need to secure necessary approvals and implement the activities under their plan.
In DFNN’s case, it noted that it had raised P450 million in capital via private placements last year. Proceeds were set aside to settle existing debt, invest in cybersecurity and artificial intelligence and cover regulatory listing expenses.
It had likewise increased its authorized capital stock to convert debt into equity and “significantly reduce our financial liabilities moving forward.”
DFNN also recently launched LottoMatik, a portable point-of-sale device that allows sellers, or sub-agents, to sell Philippine Charity Sweepstakes Office lottery tickets.
The company particularly expects this project to help in bouncing back and scaling its business.
Subsidiary iWave, on the other hand, is set to roll out this year its e-gates system in Ninoy Aquino International Airport Terminals 1 and 3, both of which are undergoing rehabilitation.
“We remain confident that the outlined strategies form a solid foundation for DFNN’s continued viability and growth in the years ahead,” it said.
Should it fail to turn around its negative stockholders’ equity, the PSE has the option to either extend the company’s deadline or proceed with involuntary delisting procedures, depending on DFNN’s written explanation.
Unioil Resources and Holdings Co. Inc. was the last company to make an involuntary exit from the local bourse due to negative stockholders’ equity.
In a May 2023 notice, the PSE pointed out that this had been the case for Unioil since Dec. 31, 2000. Apart from this, the company failed to submit annual and quarterly reports from 2017 to 2022, and did not pay penalties for disclosure violations.
Unioil was thus delisted on June 23, 2023.
