DFNN Inc. on Friday said that its board had approved a plan to convert outstanding obligations into equity as part of efforts to strengthen the firm’s capital base.
In a disclosure, DFNN said its board agreed to the issuance of up to 500 million common shares with par value of P1 each to existing creditors through a debt-to-equity conversion scheme.
The shares will be issued at P1 apiece — equivalent to a total subscription amount of up to P500 million — and supported by an independent third-party fairness valuation.
The subscription will be fully settled through a set-off against DFNN’s outstanding obligations to participating creditors, effectively converting the company’s debt into equity.
The board also approved the issuance of 100 million preferred shares at P1 each, representing an additional P100 million to be paid through the conversion of outstanding debt.
The preferred shares will carry a fixed dividend rate of 10 percent per year, within the 12-percent ceiling set under the company’s articles of incorporation.
DFNN said the dividends would be noncumulative and payable only from unrestricted retained earnings, subject to declaration by the board.
The preferred shares will also be nonvoting, nonparticipating, nonconvertible into common shares and redeemable at the option of the company.
DFNN’s share price rose by 3 centavos, or 3.95 percent, to close at P0.79 each on Friday.
