(Bloomberg) -- Shares of The People's Operator Holdings Ltd., an “ethical mobile network provider” backed by Wikipedia founder Jimmy Wales, dropped more than 70 percent on Thursday amid a deepening funding crisis.
In a share offering aimed at paying down debt and driving a new marketing campaign, TPO accepted a subscription value 80 percent below Wednesday's closing price, according to a statement Thursday. The company, based in London's so-called Silicon Roundabout area, said it may be at risk of insolvency if the terms of the 2.8 million-pound ($3.8 million) transaction are not approved at a general meeting later this month.
TPO offers pay monthly and pay-as-you-go contracts via wholesale agreements with providers EE and Three in the U.K., and Sprint and T-Mobile in the U.S. Users are able to direct 10 percent of their monthly bills to a cause of their choice, and the company's charitable foundation receives a quarter of its U.K. trading profit.
The company had a market value of about 112 million pounds at its 2015 peak, before it started to warn of an increasing threat posed by U.K. competitors that were not present at the time of its 2014 initial public offering. That had fallen to about 200,000 pounds after the stock slumped as much as 77 percent to 0.12 penny on Thursday.
TPO had 80,000 subscribers in the U.K. and 21,000 in the U.S. as of April 2016, according to a full-year results statement, having set itself a target of 140,000 U.K. subscribers by the end of that year. It has not reported subscriber numbers since, and a spokesman for the company didn't respond to a request for comment.
Current trading is in line with expectations, TPO said in Thursday's statement, forecasting second-half revenue 19 percent higher than the 1.62 million pounds it earned in the first half of this year.
Wikipedia founder Wales was non-executive chairman of TPO until July and remains on the board as a non-executive director. He owns a 4.6 percent stake in the company, according to data compiled by Bloomberg. A spokesman for The Wikimedia Foundation, the not-for-profit owner of Wikipedia, didn't respond to a request for comment.
To contact the reporter on this story: Joe Easton in London at jeaston7@bloomberg.net.
To contact the editors responsible for this story: Simon Lee at slee936@bloomberg.net, Paul Jarvis, John Viljoen
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