Gaming technology provider PhilWeb is throwing a Hail Mary pass in an attempt to save the company from the wrath of Philippine president Rodrigo Duterte.
On Wednesday, PhilWeb was granted a 10-day suspension in trading of its shares on the Philippine Stock Exchange due to “material uncertainties” affecting the company. The shares have lost four-fifths of their value since Duterte took office on June 30 and declared a war on online gambling.
Until Wednesday, PhilWeb provided gaming software to 286 eGames cafes operated by the Philippine Amusement and Gaming Corp (PAGCOR) but Duterte’s comments convinced PAGCOR not to renew PhilWeb’s license, leaving the company with no option but to ‘wind up’ its operations in the country, which is PhilWeb’s sole revenue source.
Late last week, PhilWeb chairman Roberto Ongpin resigned from the company after Duterte singled him out as an example of the ‘oligarchs’ the president wants to purge from positions of influence. But Ongpin’s exit failed to sway PAGCOR’s decision not to renew PhilWeb’s license.
On Wednesday, PhilWeb held an emergency shareholders meeting in Makati City, at which Ongpin announced that he would auction off his 771.75m PhilWeb shares, which represent a 53.76% stake in the company. The auction will last until Aug. 17, after which Ongpin’s shares will go to the highest bidder.
Ongpin called the share sale his “final effort to save the jobs of thousands of innocent people who will be affected” by the permanent closure of PhilWeb’s business. Ongpin claimed that PhilWeb employees and shareholders were “innocent bystanders” that were nonetheless hit by the “lightning bolt” Duterte had hurled at the chairman.
PhilWeb president Dennis Valdes told shareholders that the company didn’t plan to immediately lay off any employees, as the company intends to file for a new PAGCOR license “within the next few weeks.” Assuming Ongpin’s share sale is enough to appease Duterte, Valdes said he expects PhilWeb could restart its operations in “a week or two.”
Should this Hail Mary fail, Ongpin said PhilWeb’s board “will have to decide how to move forward.” Ongpin says the winning bidder of his shares will be allowed to back out of the deal should PhilWeb fail to win a new PAGCOR license by Aug. 31.
Duterte’s original anti-online comments were based on his belief that Philippine residents were gambling too much. PAGCOR’s eGames cafes, which feature terminals offering a variety of digital casino games, are accessible by local residents.
Still unclear is whether Duterte intends to expand his campaign to include the international online gambling sites licensed by the First Cagayan Leisure and Resort Corp under the Cagayan Economic Zone Authority (CEZA), which by law are prohibited from dealing with Philippine residents. Yet Duterte has commented on the perceived difficulties in collecting taxes on “bets outside the Philippines,” meaning the other shoe may have yet to drop.