in the: Asia-Pacifi& region, and Teleglobe' S Globeinternet. The Compa'ny' s network also includes a local high-speed connection to 1-Net, Singapore's high-speed, nationwide broadband network; which is 15% owned by the Company and which serve5, as the foundation for. the Singapore government's Singapore ONE .i.~nitiative to link all residents, businesses and institutions. Each of the Company's regional networks in' singap6re, Hong Kong
and the Phflippines .are..monitored around 'the clock locally and by 'the Company's Network Oper4tions Center based in Singapore.
Pacific Internet was' incorporated in the Republic of Singapore 'in'March 1995 and is indirectly controlled by Temasek Holdings (Private) Limited ("Temasek"), the principal holding company of the' government of the Republic. of Singapore. Pacific. Internet's principal executive office is located at 89 Sc, ience Park, Drive, #04/09-12, The Rutherford., Singapore Science Park, Singapore 118261, and,its telephone number at that office is (65)
872-0322. The Company. maintains Websites at pac.ific~net.sg~ http:llwww.hk.super~net and pacific.net.ph. Information contained in the Company's Websites do not constitute, and shall not be deemed to constitute, part of this Prospectus.
Recent Developments
Based on the Company's preliminaty ~audited 'results of.' operations for the nine months ended September30, 1997. and 1998, net sales increased by 53.3%~t& S$52.4 milhon.QJS$31.l million) for the nine month period ended September 30,1998 from S$34.2 miilion'for the corresponding period in 1997 Revenues frorn dial-up access services increased 82.8% for 'the nine months' ended September 30, 1998 compared to the p'rior year due 'primarily to a large increase in the' number of dial-up customers in Singapdre and Hong Kong. From September~30 1997 to September30, '1998, the number of dial-up customers 'grew' by 69'%. The increase in 'dial-up access "revenues was parh.~y offset by a 55:6% decrease in other revenues, which decreased primarily du& to~ the downsizing of the CONTACT Division and reduced activation and registration fees. The Company expects 'the decline in activation and registration fee revenues to continue as the Company increasingly waives these fees in'response to growing competitive pressures 'in' the .Singapore ISP market.
Ope,ratin,g income, on a pr4iminary unaudited basis, 'increased tb S$l 1.0 rm'llion (U'S $'6'.5 mi'llion) for the nine month p&i'od ended, September 3,0, 1998 'from an operating loss of S$2.0 inillion for the corresponding period in 1997. The turnaround was attributable to a combination of the gr'qw"th in' net' sales and the moderate growth in operating costs' and expenses, which increased by 14.5% for th& nine 'niontlis ended September 30, 1998 'as compared to the corresponding period in 1997. This moderate rate of growth is primarily due to more efficient utilization of internatiorial bandwidth cap a'city, which enabled the Company to increase its subscriber base substantially withbut a' proportional increase in international leased line charges. Due to the turnaround in operating incorne, provision made' for income taxes in6reased to S$l .4 million (US$0.8 million)' for the nine months ended 'Septembet 30, 1998 frdm S$0.9 million for the corresponding p"eriod in 1997, net income increased to S$9.4 'million (US$5.6 miflion) frbm' a net' ldss of 'S$4.2" million 'and comprehensive income increased to S$9.5 million QJS$5.6 million') from a net loss of'S$4.1 millibn. The Company's' preliminary unaudited income per ordinary share was S$0.93 (US$0.55Y for the nine months ended Septe'mber 30, 1998 as compared with a preliminary unaudited loss per ordinary share of S$0.41 for the corresponding period in 1997.
On December 16, 1998, SingNet (the Company's principal competitor in the Singapore jSP market) announced. various pricing initiatives which include. providing toll free ,local telephone 3access to dial-up subscribers in Singapore. starting ,,January 1, 1999; offe.4ng three months of free basic service to all new subscribers (or six months in the. case of customers switch~.ing. from a.competing service); and providii~g a 30% discount on all leased line access account services. In order to try to preserve its subscrib.,er base and market share, the Company plans t~ respond to SiegNet' 5 new ,pnc ing initiatives. with its own price. reduction and call charge absorption programs for Singapore subscribers. The .Company is currently evaluating the alternative responses available and the timing for their implementation See ".'Risk Factors-Risks Relating to the Company
- Competition," ~"Mahagement' 5 Discussion and Analysis of Financial Condition and Resnlts Qf Operation-. Recent Developments;" ~ and "-Competition'"
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Immediately prior to the effectiveness of the Registration Statement, Sembawang' Ventures Pte Ltd ("SembVentures") transferred its 50.1% interest in Hong Kong supernet to the Company in exchange for 143,566 Shares, (the "Restructuring").
Prior to 1998, the 'Company held interests in Hong Kong Supernet, as well as several other subsidiaries and associated companies. These interests were transferred to SembVentures on January 2, 1998 in connection with an earlier restructuring' (the' "Disposition") designed to achieve certain operational and administrative efficiencies. See "Certaln Transactions-The 'Disposition." Pursuant to the Restructuring, the Company reacquired a 50.1% interest in Hong Kong Supernet from SembVcntflres. The renaaining entities transferred to SernbVentures in connection with the Disposition were not reacquired by the Company.
Effc&tive ,.October 5, l9"98,~ Se' ,mb,awang C9rporation Ltd. ("SembCorp"), which holds inditecily through SembVentures 74.99% of the Company, and Singapore Technologies Industrial 'Corj$o' ration .Ltd. merged (the "Merger") under a new holding company, SembCorp Industries Ltd. ("SembCorp Industries"). As a result of the Merger, SembCorp Industries now owns 100% of SembCorp and is the indirect majority shareholder of the Company following the Offering. See "Business-Overview" and "Principal and Selling Shareholders."
On October 8, 1998, the Telecommunications Authority of Singapore ("TAS") announced that it was lifting restrictions on the number of licensed ISP operators in Singapore. See "Risk Factors-Competition" and "Business-Government Regulation."
On October 9, 1998, Pacific Internet entered into a' non-binding Memorandum of Understanding (the "MOU") "with Thakral Brothers Pte Ltd ("Thaicral Brothers"), a Singapore company with business interests in India, to enter into a strategic joint venture relating to the operation of an Internet-related and ISP business in India (the "India Joint Venture"). Pacific Jnternet and Thaicral Brothers are expected to own 49% and 51%, respectively, of the India Joint Venture. As the MOU is non-~binding, Pacific Internet can give no assurance as to when or whether the India Joint Venture will be consummated or whether it will be consummated on the terms contemplated in the MOU or at all. See "Business~verview."
The Offering
The Offering
Over-allotment Options
Shares To Be Outstanding
After the Offering
Use of Proceeds
Listing
An offering of 3,000,000 Shares, representing 2,100,000 Shares offered by the Company and 900,000 Shares offered by the Selling Shareholders (the "Offering").
The Company and, the Selling Shareholders have granted to the Underwriters options to purchase up to an additional 187,500 Shares and 187,500 Shares, respectively, solely for the purpose of covering over-allotments, if any. at the initial public offering price set forth on the cover page of this Prospectus, less the underwriting discounts shown. See "Description of Share Capital" and "Underwriting."
12,243,566 Shares. (1)
To finance potential acquisitions in existing and new markets in the Asia-Pa9ific region, fund papital expenditures and for other general corporate purposes, including working capital. See "Use of Proceeds."
The Shares have bee'n approved for listing, subject to official notice of issuance, on the Nasdaq Stock Market's National Market.
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